Celebrating 20 Years by Cinnaire

A publication of Great Lakes Capital Fund

LOOKING BACK AND AHEAD

Volume 20 | Issue 1 | 2013

WHY YES, the grass is GREENER over here.

Sometimes brilliant advising and accounting isn’t enough. Allow us to give you an extra nudge over the fence.

Audit and tax services

Cost certification

Market studies

Transaction consulting

Securing tax credit equity – Low-income housing – Historic – Energy

Exceptional client service is what separates Baker Tilly from the rest. Our tailored affordable housing services address your needs and deliver the individual attention you deserve. It’s our pledge to you, because in the end, your definition of satisfaction is the only definition that matters.

Come see what’s happening on our side. Connect with us: bakertilly.com Don Bernards, CPA, Partner 608 240 2643 | donald.bernards@bakertilly.com

FE A TURES THE BEGINNING......................................................... 6 THE FAB 5.................................................................. 10 GLCF CELEBRATES 20 YEARS....................................... 15 THE NEXT 20 YEARS................................................... 18 REFOCUSED: GLCF POSITIONED TO THRIVE IN UNDER-REPRESENTED MARKETS............................. 22 THE CHILDREN’S TRUST FUND..................................... 25 HOW GLCF IS CELEBRATING...................................... 30

DEP A RTMENTS CEO’s Message.......................................................... 5 Celebrating 20 Years EFFECTIVE LEADERSHIP............................................... 26 The Secret Ingredient

GLCF NEWS.............................................................. 31 Giving Back events & happenings............................................ 32 Exciting New Hires and Staff Promotions advertiser index..................................................... 34

Ginosko Development Company “Building a Brighter Future Today” Ginosko Development Company (GDC) is a real estate development company specializing in quality affordable housing creation and preservation. GDC, through its subsidiaries and joint ventures, engages in the acquisition, development, redevelopment, ownership, and operational oversight of multifamily properties primarily in the United States. Its activities include the acquisition and development of residential properties and undeveloped land reserves for development or sale. Ginosko is the Greek meaning for, “to understand completely” or “to know.” We at Ginosko Development Company, believe that a thorough understanding and comprehensive knowledge is the unbreakable foundation for any successful real estate venture. GDC’s communities are known for their careful planning, attention to detail and respect for the environment. GDC strives to lead in the evolution of real estate use in order to meet the market needs of a global economy.

41800 West 11 Mile Road, Suite 209 | Novi MI 48375 office 248.513.4900 | fax 248.513.4904

www.Ginosko.com

CEO’s MESSAGE GOVERNING BOARD Wendell Johns, Chair Retired Michael J. Taylor, Secretary/Treasurer PNC Bank James S. Bernacki Comerica Bank Catherine A. Cawthon Fifth Third CDC Derrick K. Collins Chicago State University

CELEBRATING 20 YEARS BY MARK MCDANIEL, CEO/PRESIDENT GREAT LAKES CAPITAL FUND

William C. Perkins Wisconsin Partnership for Housing Development, Inc. James W. Stretz George K. Baum & Company Donald F. Tucker Don Tucker Consulting Paul J. Weaver Retired

CORPORATE OFFICERS Mark S. McDaniel, President & CEO Christopher C. Cox, CFO James L. Logue III, COO Jennifer A. Everhart, Executive Vice President Rick Laber, Executive Vice President Kevin Crawley, Executive Vice President This magazine is published quarterly by the Great Lakes Capital Fund (GLCF) to provide readers with information on affordable housing and economic and community development resources. This publication is copyrighted. The reproduction of Avenues to Affordability is prohibited by law. For additional copies, comments, concerns or to be added to the mailing list, please contact the Great Lakes Capital Fund office at 517.482.8555 or visit www.capfund.net. Editorial and Advertising Mary McDaniel, CMP • Alternative Solutions, LLC 517.333.8217 • mcdaniel64@comcast.net Graphic Design Melissa Travis • Ink Ideas Graphic Design, LLC 989.272.3101 • www.inkideasgraphicdesign.com Lansing Office 1118 S. Washington Avenue Lansing, MI 48910 Phone 517.482.8555 Detroit Office 1906 25th Street Detroit, MI 48216 Phone 313.841.3751 Indianapolis Office 320 N. Meridian St., Suite 516 Indianapolis, IN 46204 Phone 317.423.8880 Madison Office 2 E. Mifflin Street, Suite 101 Madison, WI 53703 Phone 608.234.5291 Tinely Park Office 18450 Crossing Drive, Suite C Tinley Park, IL 60487

It’s been 20 years since the inception of the Capital Fund. It was originally a single purpose investment vehicle known as the Michigan Capital Fund for Housing. It was created as a potential solution to a problem the Michigan State Housing Development Authority was experiencing in the late 1980’s and early 90’s. None of the nationally based investors or syndicators had interest in investing in Michigan let alone a MSHDA financed affordable housing community. With the foresight of Jim Logue, Executive Director and Jeanne Peterson, Director of Legal Affairs of MSHDA they pursued a locally based model of investment management known as a state equity fund. In 1992, there were only four or five entities in the country. MSHDA believed that the entity had to be a private non-profit corporation rather than a state governed or controlled entity to make the greatest impact. A task force was appointed to study the possible creation and how it would be operated and governed. That task force became the board of director of what came to be known as the Michigan Capital Fund for Housing. When Jim and Jeanne approached me to consider being its first Executive Director I said no as I was happy and stabile in my job working for a non-profit. They didn’t take NO for an answer. I had just gotten engaged to be married, when they asked again and I said yes. You can imagine the reaction when I got home that night and told my fiancé Mary that I had just quit my job to start a new non-profit state equity fund.......Whew!!! After the initial shock she has been one of my biggest supporters ever since. It is also our 20 year anniversary of marriage this year. Everyone involved was pretty sure there would only be one investment fund, completed in 3 years, and then the fund would fold. But, here we are today as the GLCF, a Community Development Finance Institution serving 8 states, managing over $2.8 million in equity and loans. We are a lender, investor, economic driver, and leadership driven. There isn’t a single one of us from the beginning that could have predicted what we have become. We have been driven to help people have a better life through affordable housing, supportive housing, economic development, creating jobs, and mentoring young people to become leaders in their schools and neighborhoods. We have been able to accomplish this because we have been able to attract some of the best and the brightest in the field of housing finance and community development. The thing that sets them apart is they all have a passion for helping people. Every day I wake up hoping this isn’t all a dream and find that I’m back being escorted out of a public hearing by the police or getting shouted down as I was trying to get an affordable housing community approved. There are over 100,000 people we have impacted with our work that will tell us it isn’t a dream. I want to thank our investors and development partners who have believed in us and supported us in our work the past 20 years. I don’t believe we have ever let you down and I don’t believe we ever will. Looking forward to the next 20 years in working with all of you make a better life for the people in our states that need healthy sustainable community’s to live in. One last thing. Thank you to all of our committed employees. You are what makes it happen every day and allows so many of us to be living our dream. Finally, thank you to my wife and family who have supported me all these years and have been part of the vision of GLCF. 5

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the

beginning How a socially-minded entrepreneur and his pioneering nonprofit created an economic impact of over $2.7 billion and counting.

n Battle Creek, Michigan, a formerly homeless veteran finds well-deserved, permanent housing and is welcomed into the community, like family. He discovers a passion for cooking and gives back to that same community by teaching others the trade. In Chicago, Illinois, low-income parents are able to send their autistic sons and daughters to a school that offers the highest standards of care. The curriculum balances academic and functional skill development, providing a mix of behavioral, speech, music, occupational, and vocational therapies. This school, a lifeline, connects the families and their children to vital services needed to thrive, promoting the highest level of long-term functioning possible. In Escanaba, Michigan, a four-story, functionally obsolete building in a distressed community is converted to an attractive mixeduse development. The building, listed on the national Register of Historic Places, becomes a symbol of vibrancy in the community’s downtown district In rural Oconto, Wisconsin, a paper mill (the area’s largest employer) avoids closing its doors, instead modernizing its production to yield products from 100% recycled fiber. A cutting edge closed-loop waste water system is installed and the locally-owned mill is projected to operate sustainably for at least 50 years.

In Walkerton, Indiana, a neighborhood plagued by blight and crime is completely redeveloped with new infrastructure and beautiful rent-to-own homes offered to low-income families at lower costs than the previous dilapidated, substandard rentals. This project catalyzes further investment in the rural community. All of these exceptional projects may have remained wishful proposals without the dedication and expertise of the staff at Great Lakes Capital Fund (GLCF) and its many vital partners. As GLCF celebrates twenty years of operations, there is no better time to reflect on the two decades past. How did a socially-minded entrepreneur and his pioneering nonprofit create an economic impact of over $2.7 billion and counting? How did this organization become the paradigm for financing community development activities in the Midwest and other distressed parts of the country? The story begins in the 80’s, a crucial pivot point for housing in the U.S. When the Tax Reform Act of 1986 established the Low Income Housing Tax Credit (Housing Credit) program, its primary purpose was to produce affordable housing in an efficient and market-driven manner. It provided a modern alternative to the failed public housing policies of prior years, better aligning social equity and economic efficiency. Today, the Housing Credit program is commonly accepted as the most successful housing program in our nation’s history. Over 2.4 million apartments for low-income families and individuals have been developed since the Housing Credit was created, according to latest estimates by the National Council of State and Housing Agencies (NCSHA). Despite the program’s success, the U.S. faces an alarming trend. Studies by Harvard University’s Joint Center for Housing Studies (JCHS) in 2011 and 2013 show that America’s renter households have become increasingly burdened by housing costs over the past several decades. In 2011, nearly half of all renter households spent more than 30 percent of their household income on housing costs (rent and utilities). By generally-accepted standards for housing afGREAT LAKES CAPITAL FUND

fordability, this group is moderately cost burdened and 28 percent of these renter households are severely-burdened, with over 50 percent of their incomes consumed by rent and utilities. In contrast to proportions of housing affordability in 1960 and 2000 (see Figure 1), these figures highlight a clear problem in rental housing affordability. When households spend such substantial amounts of their incomes on housing, their ability to afford basics such as food, clothing, medical care or transportation are severely impaired. Investing in savings and other tools for long-term financial solvency is pushed even further out of reach. The local economy suffers as well, as residents have no extra wealth to spread to local businesses. As such, affordable housing is integral in empowering people to escape poverty and in stabilizing neighborhoods. Against this backdrop in 1992, the Michigan Capital Fund for Housing (MCFH) was created in partnership with the Michigan State Housing Development Authority (MSHDA) to meet the immediate and critical need for affordable housing in Michigan. Nationally-based equity funds were active in Michigan but did not adequately meet the needs present, with funds being largely unavailable for smaller scale developments and projects with nonprofit sponsors or neighborhood housing organizations. MCFH rose to meet those needs, expanding the use of the Housing Credit to underserved markets. Tasked to lead the way for the newly created 501(c)(3) nonprofit organization was Mark S. McDaniel, BSURP, a seasoned real estate professional with a history of dedication to serving communities in his home state. Mentored by MSHDA’s executive director, Terrence Duvernay, and in collaboration with current COO, Jim Logue, the dream of MCFH was brought to fruition and operations

Figure 1

When households spend such substantial amounts of their incomes on housing, their ability to afford basics such as food, clothing, medical care or transportation are severely impaired. Investing in savings and other tools for long-term financial solvency is pushed even further out of reach. The local economy suffers as well, as residents have no extra wealth to spread to local businesses. As such, affordable housing is integral in empowering people to escape poverty and in stabilizing neighborhoods.

Declining housing aﬀordability in the U.S.

100% 90%

Aﬀordable / not-‐burdened (Less than 30% HH income on rent and uCliCes)

80% 70% 60% 50% 40%

22%

30% 12%

10% 0%

Severely burdened (>50% HH income on rent and uCliCes)

18%

20%

12% 1960

20% 2000

Moderately burdened (30-‐50% HH income on rent and uCliCes)

28% 2011

Source: Harvard University Joint Center for Housing Studies (JCHS), "America's Rental Housing: MeeCng Challenges, Building on OpportuniCes" (2011) and "The State of the NaCon's Housing 2013"

AVENUES TO AFFORDABILITY

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Since then, GLCF’s momentum has only continued to build. Its staff has grown to over 50 employees located in five different offices. GLCF has extended over $1.7 million in grants. Its Lending portfolio has surpassed $87 million in debt. Its Housing Credit portfolio now includes 550 developments, which provide more than 33,000 affordable rental homes across the states of Michigan, Indiana, Wisconsin, Illinois, New York, Mississippi and Minnesota (in order of market expansion). Of these developments, approximately 57 percent serve families, 32 percent serve seniors and the remaining 11 percent serve special needs populations. GLCF currently manages 41 Housing Credit funds and 25 NMTC assets. The exponential growth and success achieved by this small nonprofit wouldn’t have occurred without the dedication of its diverse and technically proficient staff. The team hails from a variety of fields: accounting, finance, real estate, construction management, property management, urban planning and public administration. Their division of labor is unique, with Asset Managers specializing in a particular phase of the asset’s life (construction/lease up, stabilization, troubled assets, and disposition). Compliance associated with program guidelines is monitored by a professional Compliance group, separate from the Asset Management team to allow asset managers time to fully analyze and manage their asset portfolios. GLCF has held itself to top standards for Fund and Asset Management, and has never experienced a Housing Credit recapture due to foreclosure. Protecting investors and minimizing any potential exposure they may have is of utmost importance. Because of that, GLCF maintains a greater level of reserves than typical syndicators and has never had to call capital from investors above their original commitment amount to save troubled assets. GLCF has several investors that have invested since MCFH Fund I in 1995, a testimony to its track record in what have been considered as some of the most “difficult” markets in the nation. GLCF has consistently upheld 100% on-time investor reporting and has met

began in a small office space in Lansing in 1993. MCFH Fund I, closed in 1995, channeled $10 million of investor equity into five affordable multi-family developments. Following the successful execution of its first Housing Credit fund, MCFH began to grow and closed an additional Housing Credit fund annually thereafter. The newly-formed nonprofit had taken off and was able to repay the initial $500,000 grant for operations provided by MSHDA less than three years after opening its doors. In 2002, MCFH partnered with local real estate professionals in Indiana to recreate the successes achieved in Michigan in this new market. Indiana Capital Fund for Housing (ICFH) was born. The first ICFH fund financed eleven affordable communities utilizing $26 million of investor equity. Soon after, MCFH and ICFH merged to create what is now known as Great Lakes Capital Fund (GLCF). As GLCF’s reputation and expertise grew, so did the demand for its services, and in 2003 a new subsidiary corporation was formed – Capital Fund Services (CFS). GLCF was well known as the Housing Credit syndicator of the Midwest, although its services and staff expertise transcended the traditional syndicator label. By 2005, the company had fully embraced its position as ”more than a syndicator” and began managing a New Markets Tax Credit (NMTC) allocation of $60 million on behalf of the Michigan Magnet Fund (MMF). GLCF expanded into the state of Wisconsin to meet the demand for affordable housing and began offering debt products for affordable developments through CFS. GLCF had effectively positioned itself as a “one-stop shopping” resource for its affordable housing development partners, strengthening the Housing Credit program’s impact. In 2006, the company recruited some of the best title professionals in the industry and Capital Fund Title Services began operations. That same year, the nonprofit achieved another major milestone: It surpassed $1 billion in economic impact. The following year, CFS received a CDFI designation and gained access to an even broader pool of capital to finance community development activities in its footprint.

Figure 2

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GREAT LAKES CAPITAL FUND

or exceeded its targeted rate of return for each fund since inception (see IRR chart), ensuring that investor promises have been kept while invaluable social returns are delivered to the communities in which investments are made. Although the company has evolved and expanded, its core remains unchanged. GLCF is and always has been tremendously adept at raising and deploying capital into real estate partnerships. At the heart of this is the will to serve people and to invest in opportunities for individuals, families and communities to thrive. Building on its strengths, and once again responding to market needs, GLCF, in partnership with Michigan Economic Development Corporation (MEDC) is embarking on a new venture: Develop Michigan (DMI). The entity is a Development Finance Organization (DFO) that provides additional sources of capital for large-scale development projects that promote economic growth and job creation in the state of Michigan. Although commercial real estate is a critical economic driver, securing financing through conventional sources is difficult at best in current times. DMI strives to provide this critical capital by providing Senior Debt Finance and Mezzanine Capital to developers to make high-impact projects viable, while delivering risk-adjusted market returns to investors. Some of the types of projects targeted include housing, mixed-use developments, office, industrial and retail. Twenty years ago, Mark McDaniel couldnâ&#x20AC;&#x2122;t have anticipated the far-reaching effects MCFH would have when the concept of a state equity fund was broached. He couldnâ&#x20AC;&#x2122;t have known his team would create an economic impact in excess of $2.7 billion (and counting). Today, GLCF is not only a model for community development financing in the Midwest. Organizations from across the country have recruited GLCF to guide them on engaging in

GLCF is and always has been tremendously adept at raising and deploying capital into real estate partnerships. At the heart of this is the will to serve people and to invest in opportunities for individuals, families and communities to thrive. the same types of double- and triple-bottom line activities. Yet, the work is not done. With wages stagnating, people facing long-term unemployment, the demand for affordable housing rapidly increasing, and public resources dwindling, the need for the services GLCF provides has never been greater. With the broad range of economic development tools at its disposal and a most impressive track record, GLCF is well positioned to lead the charge in creating innovative ways to fund community economic development. It is certainly ready to roll up its sleeves and get down to the same types of business it has done for twenty years: the business of doing well, by doing good.

GLCF staff 2012

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THE FAB 5 THE FIRST FIVE INVESTMENTS THEN AND NOW By Tom Edmiston, Senior Vice President, Origination AND James White, Equity Disposition Asset Manager, Asset Management

efore we look at our first five investments, let’s revisit that point in time when the Cap Fund was created and offer some perspectives about what was happening in Michigan and in the LIHTC industry. Here are reflections from some of our founders and partners: According to Jean Peterson, MSHDA’s former Legal Counsel, “In 1989, the LIHTC was still very new and the syndication markets were not attuned to its use when the idea for creating a nonprofit equity fund was first discussed. Doug Shelby & I were thinking about the tax credit and how to get more investors interested in it. We thought if there was an organization in place that would invest in deals not only because it was good business but because it was good public policy, we could really make some things happen in Michigan.” (Jean now lives in California and works for Cohn Reznick) Gary Heidel, MSHDA’s former Executive Director adds, “Thinking back to the state of affordable housing development in Michigan in the early 1990s, it was clear to many of us at MSHDA that there was a definite need for a locally-based syndicator of the LIHTC. There simply were not enough applications for small multifamily projects located in distressed urban cities being funded.” According to Dan Mendelson and Karen Przypyszny (both former Enterprise employees), “Enterprise responded to the RFP that MSHDA issued – to provide technical assistance in establishing and structuring an equity fund in Michigan. We had worked with local equity funds in Rhode Island, Ohio and Oregon to bring together investors to support smaller projects. With Mark McDaniel’s hire, we were able to reduce our role after a few short years. Mark has helped the organization stay true to its mission, while at the same time doing some of the most creative development deals and expanding the organization beyond strictly equity investment”. 10

(Dan is now with Chesapeake Community Advisors and Karen is with National Equity Fund, NEF) Hayward Wells – Benton Harbor, MI

When Mark McDaniel met with Bishop Nathaniel Wells in the early ‘90’s, the Bishop had a dream of creating high quality, affordably-priced rental housing for low-income residents of Benton Harbor and Muskegon - two communities served through his Church of God in Christ ministry. Bishop Wells cited a biblical passage in the book of Matthew, “Inasmuch as you did unto the least of these, you did unto me.” The Bishop took that scripture as a mandate from Christ to serve those who are less fortunate in our society. With help from MSHDA and the newly-formed Cap Fund, Bishop Wells established Trinity Village Non-Profit Housing Corp. and set out to develop several housing developments using housing tax credits, including the Hayward Wells Estates in Benton Harbor (one of the Cap Fund’s “Fab 5”). GREAT LAKES CAPITAL FUND

The development was financed under MSHDA’s 1% interest rate Direct Lending Program along with HOME dollars, an FHLB-AHP grant, and $1.16 million from the Cap Fund. Located near the city’s high school and within walking distance of the only major food store in Benton Harbor, the development includes 81family units in 8 separate buildings and it includes a community center. The development was the first new construction project in more than a dozen years because the City of Benton Harbor had suffered a major blow when a major manufacturer relocated its facilities outside of the city. Along with job losses, the city had struggled with racial tension and segregation. Hayward Wells Estates signaled a new era was about to begin for the city and its residents. At the end of the 15 year LIHTC compliance period, the Trinity Village acquired the Cap Fund’s Limited Partnership interest in the property by exercising the nonprofit’s Right of First Refusal and by assuming the outstanding loans. The Cap Fund was reimbursed for its Third Party costs (i.e. consultant fees, legal and audit costs, etc.). Marsh Ridge – Grand Rapids, MI “My partners, Bill & Connie Antisdale and I kind of stumbled onto the Cap Fund,” stated real estate developer, Marv Veltkamp. “We were working on a 100 unit senior development in Grand Rapids called Marsh Ridge. It included a MSHDA taxable bond. We had taken the tax credit opportunity to several national syndicators. They weren’t able to buy all of the tax credits and it was suggested that we offer a portion to the Cap Fund. I had served on several boards with Mark McDaniel, so I was acquainted with the Cap Fund; but I thought they only did deals with nonprofit developers. Mark happened to be familiar with the property and suggested that with ESIC’s help, the Cap Fund could take the whole deal in their inaugural fund. We have gone back to the Marsh Ridge site two more times and we have added 131 senior housing units to the development.” AVENUES TO AFFORDABILITY

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MARSH RIDGE

Over the past 15 years, the development has had some challenges and some additional resources were brought in to help pay for supportive services. An affiliate of Great Lakes stepped into the partnership to help improve operations and in 2007, another Detroit-based nonprofit CHDO replaced the original sponsor. Now that we are past the tax credit compliance period, we are conveying our partnership interests to an affiliate of the General Partner. Spring Manor – Portage, MI

The property has performed well and when we sold our Limited Partner interest to the General Partners after the tax credit compliance period for Phase 1, the appraised value exceeded the outstanding debt. Marsh Ridge turned out to be the only Fund 1 investment that was 100% owned by a for-profit entity. Lakewood Manor – Detroit, MI

Also known as “Eastside Transition Center”, this development involved the new construction of housing with supportive services for single mothers who would otherwise end up in homeless shelters. Located at the corner of Lakewood and Kerchaval across from the Eastside Emergency Shelter, Lakewood Manor was a joint venture between two nonprofits (MHT Housing, Inc. serving as the developer and managing general partner and an affiliate of Eastside Emergency Center serving as the coordinator of supportive services for residents). In the early 1990’s, MHT owned more than 1500 LIHTC units with the majority of them being located in the City of Detroit. Our first equity Fund invested approximately $1 million in this $3.6 million development. Other investors included: MSHDA, the City of Detroit (HOME & CDBG), HUD’s Supportive Housing Program, National City CDC (now PNC) and First of America CDC (now Fifth Third). 12

Located near Kalamazoo, Spring Manor is a 107 unit senior development that was newly constructed in 1995. It was developed by Joe Hollander and involved a nonprofit co-sponsor, Kalamazoo Area Christian Retirement Association (KACRA). This nonprofit had been established in 1979 and sponsored a HUD Section 202 senior development and it managed an assisted living facility. Spring Manor is strategically located near several shopping malls, a grocery store and a medical center. The Cap Fund and Enterprise provided a side-by-side equity investment ($1.8M and $1.2M respectively) which comprised about 45% of the $6.75M total development costs. The project was also financed with MSHDA’s taxable bond program with a $3.1M loan. The transfer occurred in December 2012. Assets included the real estate, a portion of the reserves and the assumption of the existing debt. Our 3% disposition fee will be based upon the sales price (i.e. the amount of debt assumed by the general partners). Victor Attar – Detroit, MI On the west edge of Detroit’s CBD is an area known as Corktown, the former home of Tiger Stadium. In 1994, the Cap Fund was approached by Porter Street Partners (a joint venture with James Couzens and Bethel AME Nonprofit Housing Corp.) to provide equity for the proposed rehabilitation of a 29 unit apartment community (two 4-story buildings with an entry court between them). The development included an elevator and laundry facility. The $3.6M development was financed with $1.5M from Fund 1 and loans from MSHDA and the City of Detroit. GREAT LAKES CAPITAL FUND

~Family Owned and Operated Since 1957~ The property performed well; but based upon our valuation model, the outstanding debt exceeded the property’s current value; so our partnership interests were conveyed to the General Partner for the assumption of the current loan and the payment of 3rd Party disposition costs. The Disposition of “Fab 5” Assets Chesapeake Community Advisors has helped develop the model and the process for the Cap Fund to convey its partnership interest(s) to the General Partner in each “Fab 5” development. This has included the analysis of possible exit taxes for Limited Partner investors, along with transfer taxes, the assessment of property value and the reconciliation of partnership accounts. Out of the five properties supported in our first Fund, two had a value that exceeded the outstanding debt at disposition: Spring Manor and Marsh Ridge. All but one of the “Fab 5” properties (Marsh Ridge) involved nonprofit sponsors. The properties with nonprofit sponsors involve a Right of First Refusal in the Partnership Agreement, enabling the General Partner to acquire our Partnership interest(s) for the outstanding debt plus any exit taxes. With the early LIHTC funds, syndicators have needed to keep a close eye on possible exit taxes. The goal is to minimize exit taxes by managing the asset and the investment fund effectively. In the 1990’s LIHTC equity pricing was in the $0.50 - $0.60 range and investor yields were in the 20% range. This resulted in fewer equity dollars flowing into the projects and this meant the Limited Partner’s capital accounts were a smaller percentage of the total project financing than what we typically see today. LIHTC investments are structured in a way that enables the Limited Partners to receive most of the tax benefits (credits and losses) with tax losses attributable to items such as interest expense, depreciation and negative cash flow. When syndicators underwrite developments, they estimate what the credits and losses will be and then they monitor each project during the 15 year tax AVENUES TO AFFORDABILITY

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VICTOR ATTAR

credit compliance period to make sure it performs according to plan and make adjustments if needed. When rents remain relatively flat; but operating costs increase at a rate which is higher than anticipated, this can lead to tax losses being assigned to the Limited Partners which exceed the amount of capital invested, and this can lead to exit tax issues. This can happen with projects in which the percentage of debt is higher than the percentage of equity (as was the case with many of the early LIHTC investments). As we look back on the “Fab 5” Generally the rents have not increased as much as we originally projected. Instead of achieving 2% annual rent increases, the properties had very modest rent increases because Area Median Incomes (AMI) in the Great Lakes region have generally trended at 0% to 1.5% per year. Operating costs did trend higher than the initial projections; primarily due to utility costs that sometimes increased as much as 5% per year; but these costs have “flattened-out” over the past few years.

Despite the fact that rent increases have been modest and operating costs have risen more than anticipated (causing the tax losses to be higher than originally projected), we have been able to keep exit taxes at disposition to a minimum by effectively managing these assets over the past 15 years. According to James White, “The Great Recession and its national real estate/mortgage crisis created a “reset” of all previous expectations. No one could have contemplated the impact this would have on the economy and the ripple effect it would have within the real estate market. However, we have found that LIHTC properties in general have performed very well despite the challenges faced”. Along the way, we also learned a few things about the Partnership Agreements. There needed to be more specific language regarding the Limited Partner’s ability to “put” its interest to the General Partner after the 15 year compliance period because General Partners sometimes change and they sometimes need a stronger incentive to work through the disposition process. In our earlier Funds, the Investor Service fees were “cash flow contingent”. Over the years (but especially after the Great Recession), investors are requiring that syndicators demonstrate they can perform asset management and compliance services throughout the compliance period — even if there are no new developments supported to generate syndication fees. This caused us to revamp our policy and now our Investor Service Fees are a “must pay” obligation of each partnership. In retrospect, the “Fab 5” served as a great launching pad for the Cap Fund. The developments addressed our mission and met the selection criteria established by founding board to support: • Smaller scale developments (up to 50 units) • Nonprofit sponsors • Distressed communities • Special needs populations The “Fab 5” included good geographic diversity (Benton Harbor, Grand Rapids, Portage and Detroit). The developments exposed our staff to a variety of learning opportunities, including: Taxable and Tax Exempt Bond financing, partnerships between for profit and nonprofit sponsors, and opportunities to work with side-by-side equity investments. Most of the developments have performed well and a few offered challenges that have helped us grow and become stronger as a partner and a syndicator. Tom Edmiston is GLCF’s Senior VP of Tax Credit Investing and our originator for Michigan. James White is GLCF’s director of Equity Dispositions.

GREAT LAKES CAPITAL FUND

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GLCF CELEBRATES 20 YEARS Great Lakes Capital Fund (GLCF) announced that 2013 marks twenty years of transforming communities from Lansing to Milwaukee, Alpena to Indianapolis, and Rochester to Chicago. Starting out two decades ago serving the state of Michigan as a small, nonprofit affordable housing investment organization, GLCF is now a full-service community development finance institution serving the Midwest. GLCF employs over fifty professionals who help manage the organizations work across its footprint which, in addition to Michigan, now includes Indiana, Illinois, Wisconsin, upstate New York and Minnesota. (See Our History, attached). In the Lansing Tri-County Area alone, GLCF has contributed $116 million to local incomes and $14.2 million in local

government tax revenue, totaling investments of $130.3 million. This investment has leveraged 1,736 jobs in the Lansing TriCounty Area since 1993.* “GLCF is a true jewel that Lansing, Michigan, can claim as its own, and we are delighted to do so,” said Mayor Virg Bernero. Investments made in GLCF’s twenty year history total $2.6 billion, including 30,000 housing units and 1 million square feet of mixed use / commercial space. This total investment has supported the creation of nearly 6,000 jobs across the Midwest. The investments made by GLCF come in the form of equity capital, short and long term debt, and a variety of state and federal tax credits. These financial resources support high impact community develop-

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ment projects and include participation by corporate investors; federal, state and local government; and foundations. Mark S. McDaniel was GLCF’s first employee in 1993. He had no idea what was in store for him after he accepted the job to run the nonprofit that started with the assistance of the Michigan State Housing Development Authority (MSHDA). Jim Logue, MSHDA Executive Director at the time and now GLCF Chief Operating Officer, sought and received approval to award a $500,000 loan to the start-up organization. The loan was repaid in full to MSHDA, well ahead of its scheduled maturity. “All I wanted to do was be the best man I could be at home to my wife and kids, and help people by providing great places to live,” said President and CEO of Great Lakes, Mark McDaniel. “I am incredibly proud of what we’ve been able to accomplish in the past twenty years and I look forward to many more success stories in the next twenty.” This model of community development finance has been so successful that GLCF partners with organizations around the country to bring its unique skills, services and expertise to assist them. GLCF works with Community Development entities that serve Mississippi, Louisiana, Arkansas and Minnesota. In 2011, Fannie Mae licensed GLCF to originate loans that support quality, affordable housing projects across the country. Besides Michigan, GLCF originated Fannie Mae loans financed in New York and Oklahoma. In 2007, GLCF was designated as a Community Development Finance Institution (CDFI) by the United States Treasury, allowing GLCF to receive $10 million in federal grants that support important community development projects throughout its geographic footprint. *Statistic derived using formulas from the National Association of Home Builders’, “The Local Economic Impact of Typical Housing Tax Credit Developments” (March 2010). 15

FEATURE

G RE A T L A KES C A PIT A L FUND

THE NEXT 20 YEARS

wenty years ago, the Capital Fund had one employee and served one state. Now, we have more than 50 employees and serve eight states with our equity investments and cover the entire country with our permanent loan products. So what’s in store for the next 20 years? We posed this question to a dozen of our staff members in a focus group setting where the participants represented a cross section of our entire team: some “old timers”, the “young and restless”, asset managers, underwriters originators and members of our administrative team. There were several themes that flowed throughout the entire discussion:

go where there is a need, stay true to our core values and expand upon our strengths. Where will we provide our services? Historically, the Cap Fund has expanded to states where local leaders have asked us to replicate our model and bring our services to fill an existing void in the affordable housing /community development arena. It has been important for us to have “boots on the ground” and to be connected with each state’s community development industry, and this has worked pretty well for us so far and we’ll likely stay on a similar path in the future. Marge Novak, our

GREAT LAKES CAPITAL FUND

VP of Investor Relations said, “We’ve responded to opportunities as they have presented themselves; and going forward we’ll need to remain conscious about maintaining the good relationships we already have with our investors and developers as we expand to new areas with our equity funds.” Cap Fund has established a local presence in each of the primary states we serve with our equity products and have built strong personal relationships in the communities we serve, and that is how we want to continue to do business. How might we modify our approach? Again, the staff echoed the sentiment that we should stay true to our core and provide the high quality service that our partners have grown to expect. Our key “partners” include: nonprofit and for profit developers, nonprofit service providers, public agencies, elected officials, lenders and private sector investors. Going forward, we could build upon our strengths and provide additional training, technical assistance and consulting in the areas of: property and asset management and financial packaging for high profile community development initiatives using public and private resources. We have helped arrange Historic Tax Credit investments on several non-LIHTC projects and we know that hundreds of communities across our footprint are trying to revitalize their downtowns by redeveloping vacant, historic properties. We can use our expertise and our connections with public/private investors to benefit more communities and to further strengthen areas where we have already made investments in the affordable housing stock. Since we are a unique community development finance organization that also happens to be a nonprofit corporation, we can work with more foundations and corporations to help channel their resources to impactful community revitalization efforts. We can also build upon our ability to arrange bond financing for community AVENUES TO AFFORDABILITY

Affordable Housing Specialists Development • Management • Investment • Consulting 3333 Founders Road, Ste 120 | Indianapolis, IN 46268 | www.crestlinecommunities.com James Wilson | 317.257.8922 ext. 11 | jmwilson@crestlinecommunities.com

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development initiatives. With the strength of our staff, we can help ensure that investments are well-underwritten and that assets are managed effectively. With whom will we PARTNER? Since our beginning we have had a core group of bank investors, some of whom have participated in each MultiInvestor Fund (about 30 of them so far). Going forward, we will want to expand our circle and diversify our investor base. This will require continuous outreach and educational efforts with corporations, utility companies, insurance companies and financial institutions that haven’t invested in the types of community development tax credits we can provide (Housing, New Markets and Historic). As we have expanded our services to various states, we have typically partnered with well-established and well-connected local organizations. This has led to very effective partnerships with good synergy, and this will likely continue as we’re asked to serve additional states. While many of these local partners sought our Housing Tax Credit expertise and resources, they are actually helping us as we develop a wide range of community development financing tools to serve local needs. Through these local partnerships we will be able to expand our services to fulfill our mission both geographically and programmatically. We will be able to serve communities even better than we have in the past; and at the

same time, provide opportunities to further diversify our sources of revenue to support our various business lines. What will the Cap Fund look like in 20 years? According to Kelly Bernero, our Advocacy and Public Relations Specialist and one our focus group participants, “Although never a large company, we have been able to employ highly skilled individuals and build the relationships that have made Cap Fund the success it is today. Keeping it small allows us to be consistent and efficient and supports strong personal relationships.” Josh White, our Asset Manager, added, “We don’t need to be huge in order to do good things.” In the future, technology will allow us to grow geographically and still keep in close touch with our partner organizations and our staff. We might find it appropriate to open more offices in second tier cities - especially those in which we are actively engaged in holistic community development initiatives. The Cap Fund’s work force and leadership team will be comprised of “Millenials” or “Generation Y” individuals by 2025. According to our 2012 magazine edition that was devoted to this topic, here are some of the characteristics that may be found when Millenials dominate the work place: • Ability to Multi-task: this plus advanced knowledge of technology will enable workers to have high productiv-

ity and to achieve efficiency...which may support the ability to diversify and grow our product lines without doubling in staff size. • Change makers and entrepreneurs: as young professionals, this population group has been savvy at creating their own jobs and opportunities for employment. (They have had to in order to pay-off huge student loans). Now they are knowledgeable, intellectual and tech savvy. They will likely innovate and make sure the Cap Fund is always at the “cutting edge” with its services and programs. • Idealistic and “Colorblind”: Many members of this population group went to schools that were integrated and grew up in a time when society became more tolerant with things like gay marriage and interracial relationships. As Millenials have become employed, women have become more fully engaged in the workforce than was the case with the “Great Society”; and the “glass ceiling” is starting to crack wide open. It is likely the Cap Fund staff will continue to diversify and become an even more dynamic melting pot of individuals who are committed to the organization’s mission. When you put it all together, the next 20 years for GLCF should be...“great”! The foundation and structure created by Mark McDaniel and the organization’s leadership team over the past 20 years has been very strong and allowed the Cap Fund to improve the quality of life for a lot of disadvantaged people. We started out with a mission and course established by the original board which turned out to be a very good one, and we have learned a lot over the years. We are at an excellent place for future growth. According to the staff who participated in our forward-looking focus group, the Cap Fund will continue to grow and expand at a realistic pace and it will build from our core values and areas of strength to serve more communities...and to bring more “spot on” resources to the communities we serve. GREAT LAKES CAPITAL FUND

Promises Made, Promises Kept. Syndicators and lenders will attest to our rock solid reputation.

For more information, contact Krystal Covington 248.833.0558

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REFOCUSED

GLCF POSITIONED TO THRIVE IN UNDER-REPRESENTED MARKETS When deadly tsunamis and frightening earthquakes pummeled countries around the globe in recent years, scientists observed that many of the animals seemed to sense the doom before it came upon them, giving them time to seek out higher ground and survive. It’s hardly in the same vein, but nonetheless the veteran and tested management team at GLCF, headquartered in Lansing, also relied on a well-honed sixth sense to know something was terribly out of kilter before a brutal national housing collapse pounded the nation and gave an extra kick to Michigan. The company, like the mythical Phoenix, would eventually rise from the ashes stronger and better positioned than ever to succeed

long into the future – though it took a bumpy ride to get there. “In late 2007 we knew something bad was headed our way,” recalled Mark McDaniel, president and CEO of GLCF and an unabashed fan of Detroit Tigers baseball who has spent a quarter-century in the affordable and community housing market and raised more than $1.6 billion of investment equity for the company. “So we got to work and came up with a strategy that called for a number of proactive steps on our part, including a significant reduction in operating costs and shifting to a two-year budget that helped us keep our eye on the longer term and not get blinded by short-term thinking.” GLCF managers—with employees taking part every step of the

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way—devised a plan to diversify and reorganize the business and even trimming back the size of its workforce. Operations were centralized back in Lansing rather than having its business interests and decision-making splintered throughout the company’s offices in Indiana, Illinois and Wisconsin. “When things were getting bad we did our fair share of hunkering down like everybody else wondering what would happen next,” said Jim Logue, the COO of GLCF with a calm demeanor, 35 years of experience under his belt, and an expertise that has earned him invitations to testify before Congressional panels on housing policy issues. “We took advantage of our experienced board of directors to help develop a well-conceived plan to survive the economic challenges ahead—even though at the time we didn’t know just how great those challenges would ultimately become.” A major tipoff that a rocky road confronted GLCF came in 2007 when Fannie Mae and Freddie Mac told GLCF managers they would be scaling back on their investments. That was bleak news at GLCF. Prior to that painful announcement the two federal investors accounted for 40 percent of GLCF’s investments—and suddenly overnight that would fall to a mere 10 percent. By late 2009 the Capital Fund managers knew they had to act quickly and decisively. They unveiled a generous, early buyout offer to employees (one year’s salary and continuation of health care benefits)

and 13 of the 52 employees jumped at it. That met the targeted savings goal of $1.2 million—twenty percent of operating funds—over the course of the two-year budget. In 2009 GLCF lost $3 million but bounced back a year later to record a $5 million profit. The story of the turnaround is an honest to goodness American success story. GLCF had not only survived the horrific economic times, but has actually turned a critical corner due to prudent actions in difficult times. Today it is hiring new employees. In the first three months of 2011 GLCF outperformed many financial institutions across the nation and raised about $140 million in capital—the most ever for a three-month period in GLCF’s 18-year history. Under the new business model, GLCF is equally committed to providing affordable housing options for low-income individuals as it is in adding to its successes in economic development projects like the conversion of an aging bicycle manufacturing facility in Grand Rapids to a multi-use office structure and preserving a paper mill in Michigan’s Upper Peninsula. GLCF is undergoing a strategic enlargement of its Midwest footprint and is working with communities in upstate New York, Minnesota and the Delta Region of Mississippi. Last year GLCF was designated by Fannie Mae as an authorized Affordable Housing Lender and became a Community Development Financial Institution.

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GLCF has some obstacles yet to clear away—including the largely underserved reputation of Michigan and Detroit as risky places to do community housing projects. There’s no denying that Michigan has been battered and severely tested by the most punishing economic climate since the Great Depression and that by many measurements (high unemployment, declining per capita income levels, a big uptick in home foreclosures, outward migration of residents, and tightened credit) the state has far to go in its economic renaissance. But it’s important to recall that the foreclosure crisis was at least as severe, and arguably more so, in California, Nevada and Florida. “I remember an occasion not too long ago where a major national insurance company bailed out on a deal because they feared we were too closely tied to Michigan in general and to the City of Detroit specifically, and they wanted nothing to do with Detroit,” said Fund CEO McDaniel. “That was largely due to a huge misconception that has been driven in the last few years by the media, and the farther you get away from Michigan the worse the misperception gets. We need to get the word out that things are actually pretty good here and getting better.” Adds Logue: “Michigan still presents unique marketing and perception challenges. But we know and understand our market and how to do business here. We don’t have to take marginal deals and instead have the luxury of competing for the best deals out there.” Investors thrive on that kind of positive thinking. They’re also impressed with GLCF’s financial track record. GLCF has always met or exceeded the rate of return promised investors up front. There has never been a foreclosure event or a recapture event in GLCF’s history. GLCF has faithfully lived up to mission to create vibrant, sustainable communities for the poor and underprivileged and those with special needs. It supports 470 housing developments and has produced 19,000 homes and apartments for 44,000 residents. Its total equity investment has exceeded $1.6 billion. “The mantra we chose to be guided by includes the words: ‘Our investors are doing financially well – and socially good.’ It’s more than a string of words to us. It’s a notable, long-term accomplishment we take great pride in being part of,” said McDaniel, the GLCF chief. GREAT LAKES CAPITAL FUND

FEATURE

CHILDREN’S TRUST FUND

A PROUD PARTNER OF GREAT LAKES CAPITAL FUND On behalf of Michigan’s Children’s Trust Fund, congratulations to the GLCF on the occasion of your 20th Anniversary. We join you in celebrating your incredible growth and success. For anyone who knows Mark McDaniel and the Great Lakes Capital Fund (GLCF) team, that growth and success will come as no surprise. There is clearly a culture at GLCF that places a high value on continuous improvement and professional development – challenging everyone to be leaders, to be creative, and to seek out ways to make meaningful contributions in the communities served. The Children’s Trust Fund (CTF), is honored and grateful for our partnership with GLCF and for this year’s $50,000 Platinum level sponsorship of our annual Pam Posthumus Signature Auction event. These sponsor dollars contribute greatly in our ability to serve Michigan’s most vulnerable children and families. Serving his second term as a CTF Board Member, the time, energy and expertise that Mark gives to the work of our organization has been invaluable; especially the ways in which he articulates value of the work we do as an economic investment in the future of our great state. A few current highlights of our work – all of which is strengthened through our partnership with Great Lakes Capital – include: • Leading advocacy and education efforts with Michigan policymakers in areas such as the impact of adverse childhood experiences on adult health and wellbeing. Support from GLCF is enabling us to lead the effort to develop a report on how adverse childhood experiences impact Michigan’s citizenry. • Continuing to solidify the standing of the Trust Fund as a true public-private

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partnership with 2/3 of our support coming from the private sector and over $500,000 raised at our most recent auction event. • Funding Direct Prevention Services in 22 communities to support our most vulnerable children and families. • Providing both technical support and funding for our statewide network of child abuse and neglect prevention councils. The Councils are a voice for child abuse prevention efforts in communities throughout Michigan. • Expanding our reach to educate new parents on the dangers of shaking a baby through an evidenced based approach called the Period of Purple Crying. Looking forward, we are ever aware that the challenges facing many of Michigan’s children and families are great. There continues to be far too many children substantiated for abuse or neglect. While our partners are doing incredible work throughout Michigan, they are, at times, frustrated in their limited capacity to meet the local needs for their services and supports. We remain heartened though by the stories from parents who go out of their way to tell us of the meaningful differences made by home visits; a parent support group; a referral to a professional who assisted with a substance abuse or domestic violence issue; or the support provided to an incarcerated parent returning home. The funding we provide in communities throughout Michigan touches so many lives in significant ways. GLCF is a true partner. We thank you and we look forward to a continued partnership in efforts to make Michigan the best place for children to reach their fullest potential.

Mitchell Milner and Joseph Caringella congratulate Great Lakes Capital Fund for its commitment to the development of housing for homeless veterans. Milner & Caringella, Inc., are consultants specializing in housing development for MC the homeless, veterans, and other special needs groups.

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When Terry Duvernay and the staff at MSHDA provided funding to establish Michigan Capital Fund for Housing (MCFH), they knew that they were on the right track to promote affordable housing investments in difficult and challenging projects. Within a year of its inception, MCFH secured investments of $10 million to invest in 5 developments in Michigan. With this launch, new and exciting possibilities for communities and for families emerged. Just what the future would hold, however, no one could possibly know. Mark, Chris, Jennifer, and the early Cap Fund team were bright, committed, and talented; they set to work, bringing safe, clean, affordable homes to families across the State of Michigan. As the organization grew, it attracted more and more intelligent, educated, and experienced people. They built the team, the organization, and their business partnerships and relationships with foresight and with care, quickly becoming respected and admired throughout the industry. In studying the success of MCFH, you will find that the statistics are impressive! From its first $10 million fund, to the $2.5 billion invested to date as GLCF, there is no doubt that its business processes and strategies have worked. The Cap Fund has it all: a powerful Board of Directors; a staff of educated, experienced, and dedicated people; coveted partnerships and relationships throughout the industry; and regular goal setting, performance reviews, and accountability structures in place with its staff that would impress any organizational expert. GLCF is, and always has been, a model of corporate structure, planning, and governance. There is also, however, a “special ingredient” that has brought it all together...something that even the most comprehensive business plan cannot infuse...there’s a certain spark, a certain chemistry, a certain magic that has created an organization and a community of people, that reaches far beyond its organizational and geographic borders. This special ingredient begins with, and extends far beyond its extraordinary leader, Mark McDaniel. When asked about the company’s ability to achieve such success, Mark is quick to offer credit to the GLCF Board of Directors, who challenged him in the late 1990’s to share the leadership of

the company with the other staff members. He credits the Board again, just recently, with its challenge to create a succession plan for the organization that prioritizes “keeping and enhancing the organization’s culture.” He doesn’t, however, often mention the stand that he has taken, from Day One, to create an organization in which he could live his own Personal Life Vision, which includes, coincidentally, encouraging others to live theirs as well. This, my friends, is the genesis of the magic. Like any great initiative, the magic doesn’t stop there… it lives in the hearts and minds of the entire GLCF team. It lives in the relationships that they create, with one another, with their partners, with their board members, subsidiaries, the families who live in Cap Fund communities, and all of the people whose commitments overlap that of the Cap Fund. In preparing to write this article, I sought to understand the impact that Mark’s vision has had on GLCF staff and in the world; I tried to put myself into the hearts and minds of its employees, board members, families, partners, and even its vendors. While I knew that the impact was substantial, appreciating its magnitude was a futile effort. As I contemplated the impact that GLCF has had in just my life, the emotions were overwhelming. So, rather than attempt to provide an interpretation for you, I decided to “hit the streets,” and to ask some folks to share their thoughts. The question varied a bit, but in general, I asked, “how has working for, or being associated with, GLCF impacted you?” The responses were varied, but they all came down to one thing: being associated with GLCF has left a profound mark on many, many people. Keith Broadnax, GLCF Staff “I have been mentored by a lot of people, from Jack to Mark to Jim. It hasn’t been just one or two people; many people have helped me over the years. That’s how I have grown. At the Cap Fund, we get the opportunity to learn without being punished for

BY DENISE STEIN GREAT LAKES CAPITAL FUND

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EFFECTI V E LE A DERS H IP

it. We are so innovative in terms of trying to create and develop new products in our communities; We are on the front lines. When we try new things, we don’t always succeed, but we always learn from those failures. That’s what I love so much; I don’t come in to work and have to do the same thing. I learn something new every day. That’s what keeps me coming back. Being a part of this team has helped me personally, it has helped the company, and most importantly, it has helped the communities that we serve.” Paul Spencer, CEO, KMG Prestige The number one thing that I take away from working with the Cap Fund is that they have a genuine commitment to communities. They are not just raising money to bulid buildings; they are trying to change the way that people live. One can obviously feel that from Mark, but I can also see it in Rick Laber and the Asset Management team. They all seek to do good work on a daily basis. The GLCF culture supports this as well. You can tell that this is not just another business deal for them. Their people are passionate about what they do and take a very personal ownership in their portfolios. Both KMG Prestige and GLCF put a very high value on relationships. We are both committed to building partnerships based on trust and integrity. When faced with challenges, Rick Laber and the Cap Fund team have come to the table with open minds and a commitment to building effective solutions for all involved. This helps me, as a leader, to use this as a model for our other business relationships as well. It is refreshing to work with an organization that has a commitment to having and to demonstrating its values in its every day dealings. On another note, I have dealt directly with Mark McDaniel in ALF’s annual Flap Jack Fundraiser… all I have to say is this: “look out next year; I’m coming for that trophy!” Jennifer Everhart, GLCF Staff “The way that we approach leadership challenges me every day, personally, to be responsible for myself, for my colleagues, and to recognize when someone is struggling. Rather than simply observe, I step in to help, to offer solutions; it’s a constant thing. The dedication that we have to teaching people to operate like that, to be like that, is remarkable. I have never worked in an organization that demonstrates its values so clearly. We demonstrate our values every day, in how we act, what we do, and how we behave with both colleagues and with customers, it makes me a better person. It’s a constant reminder of what I have to strive for and to live up to. Working for GLCF has made me more focused about the things that really matter in life. The idea of having and pursuing a Personal Life Vision has helped me to focus on the things that are important everywhere in my life. Being a part of this team has helped me to achieve my personal goals more easily. I’m a better person, 28

a better wife, a better mother. I don’t know of many organizations that make that kind of impact in the lives of their employees.” John Hayes, MCFH Board of Directors “I remember the invitation I received in the late 90’s to become a board member of the Michigan Capital Fund for Housing. As the only developer, I felt honored, but more importantly, I saw Mark’s wisdom on having a person from the trenches of affordable housing working with the Cap Fund executive staff and other board members. It did not take me long to realize that I had something to offer from my affordable housing experience. I was a strong supporter of hiring the best of the best for key executive positions. Mark and the Cap Fund team have developed an expertise in hiring strong individuals who have the ability to grow, excel, and lead the Cap Fund during times of significant growth.” Deb Anderson, GLCF Staff “Working here has brought me out of my shell. Deb Toby, my manager, has given me belief in myself. She treats me very, very well. Deb doesn’t “talk down to me,” just because she is my manager. She is down to earth. She is humble herself. When it comes to her team, she has our back. She always has an ear for me and for the team. She always puts a smile on her face. She is always willing to talk. She is fun to be with. Deb (Toby) has helped me to appreciate that, no matter what I do, it ripples through and impacts the outcomes of the entire organization. Deb makes me feel good about myself and my contribution to the company’s overall success.” I am now a stronger person; because of the important lessons that I have learned on the job at GLCF, I now know that I bring value to every aspect of my life. I now help others feel more at ease and help them to appreciate their own value, too!” Chad Perry, Plante Moran, Succession Planning Consultant “For many of the organizations with whom I have worked, the vision, values, and focus on leadership is limited to posters on the walls and are largely separate from day-to-day operations. The Cap Fund is one of the few organizations I have ever seen that has a truly symbiotic relationship between these things and its every day culture. I found that they key in working with GLCF was providing structure and transparency in all aspects of succession planning… this process was only possible because of the strength and commitment of the entire leadership team.” Conrad Schewe, GLCF Staff “Seeing the family deals and the impact on families and children has been a big eye opener for me. Seeing it in practice has been motivating. You know that it’s a good thing, but when you see that the families have a nice place to live and a stable environment, GREAT LAKES CAPITAL FUND

it’s a very good thing. The Cap Fund team is much more altruistic than anywhere else that I have worked. This gives me a different perspective on why I go to work in the morning. Working here has helped me to take a step back, evaluate my life, and to see what is important. This has been a very good thing; I try to be more engaged at home, to do more things with my kids… in the end, that is the most important thing.” Denise Stein, GLCF Consultant, Art of Leadership Advisors “Listening to the stories and comments of the folks quoted above made me think of the impact that GLCF has had on my organization and my life. As I reflect upon the past 13 years or so of my involvement with the Cap Fund, I am profoundly grateful. As I look at virtually every aspect of my businesses – both our non-profit foundation and also my executive consulting practice – I see that my ability to pursue and to realize my life’s work has been enhanced by my affiliation with this extraordinary organization. Because of the commitment of Mark McDaniel, Jim Logue, and the GLCF Executive Team to creating an organization that serves ALL of its constituents, my staff and I have enjoyed a level of success far beyond that which would have otherwise been possible. For this, I thank the entire GLCF team!”

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Investing in Neighborhoods & People. When the FHLBI, its member financial institutions and their partners work together, healthier and more vibrant neighborhoods are created, such as this one in Richmond, Indiana. Redwood Terrace’s 60 one-bedroom apartments offer permanent supportive housing for special needs clients, including the homeless and survivors of domestic violence. First Bank Richmond received a $750,000 Affordable Housing Program grant to support the project. Visit www.fhlbi.com to learn more about housing and community development programs.

The Secret Ingredient It’s in the genius of the people. It’s in the genius of Mark McDaniel. It’s in the genius of Jim Logue. It’s in the genius of every employee, every partner, every board member, every consultant, every family who lives in a Cap Fund home. Like a magnet, GLCF has attracted a far-reaching community of like-minded people. Together, WE comprise the secret ingredient. Together, WE create healthy, vibrant, and sustainable communities. As Mark McDaniel is so often heard saying.. “It’s about the People!”...and it really is!

AVENUES TO AFFORDABILITY

NEWS

HOW GLCF IS CELEBRATING

n 20 years of creating healthy, vibrant, sustainable communities we have invested $2.7 billion across Michigan, Indiana, Wisconsin, Illinois and upstate New York. That is a significant milestone we will be celebrating all year long. One way of celebrating is to give back. As an organization, and on an individual bases, GLCF has declared 2013 a year to celebrate charity in a BIG way. We have always prided ourselves on our charitable contributions to the communities we serve—and those total $50 million in our twenty year history. To date, we have raised $479 in refundable cans for Addiction Relief and Supported Recovery! All year long, GLCF staff in Michigan are bringing empty pop cans to work for Addiction Relief and Supportive Recovery (ARSR) to recycle and cash in on. ARSR regularly collects pop cans to contribute to their operating budget. Since January, GLCF staff has contributed $1,836.00 to Lincoln Apartments: Honoring Our Veterans, a GLCF supported development in Indianapolis that will open in November and serve 75 of the area’s formerly homeless veterans. On select days, GLCF staff can pay $5 and wear slippers to work, or $10 and wear jeans instead of suit/formal attire! Following are some of the highlight events we have celebrated thus far in 2013. January GLCF was honored to once again sponsor the Lansing MLK Commission Luncheon as a Diversity Partner, and doubled its sponsorship commitment to provide a total of $10,000 in college scholarships for three Lansing-area seniors. The winning essays were written by three young women: Sherye Bradley, Asha Hawkins, and Michaela Barker, who won the competition and received a $5000 award. The Lansing Luncheon is one of the largest and oldest in the country. March Art of Leadership Foundation’s Celebrity Flap Jack Breakfast – GLCF’s Mark McDaniel pulled ahead of the competition and raised the most “tips” at this year’s Annual Flapjack Breakfast. The Art of Leadership Foundation (ALF) served up flap jacks for nearly three hundred customers in just two hours! Each Celebrity Waiter raised a considerable amount of cash from tips for performing a whole host of stunts and skills, and selling toppings for the guests’ pancakes. Art of Leadership Foundation shattered last year’s fund raising record of $10,000 by bringing in more than double at $23,500. The students were excited and thankful for the sign of support they saw. GLCF staff, who worked the event, did an excellent job of organizing, serving, bussing, and working in the kitchen.

May GLCF proudly committed $50,000 to the 2013 Pam Posthumus Children’s Trust Fund Signature Auction Event. Additionally, partners and friends of GLCF generously donated another $10,200 to this worthy cause. The Children’s Trust Fund was established by the Michigan Legislature in 1982 and works to prevent child abuse in Michigan. Receiving no state tax dollars, the Children’s Trust Fund relies on charitable donations from individuals, corporations and foundations. In its 27-year history, CTF has raised more than $60 million to fund community-based, non-profit prevention services in all of the state’s 83 counties The Pam Posthumus Signature Auction Event event raised $533,000 for child abuse prevention programs in Michigan and hosted nearly 800 guests! We gratefully acknowledge our Platinum Sponsor, GLCF; Premiere Sponsors, DTE Energy Foundation and Jackson National Life Insurance Company; and Official Carrier, Delta Air Lines. 20 Year Celebration Cruise – Great Lakes Capital Fund was thrilled to join partners, investors and friends aboard the Infinity Ovation Yacht in Detroit to celebrate our 20 Year Anniversary. There will be more Celebratory 20 Year events around our footprint, including a September 10 Evening Reception in Indianapolis and an October 10 luncheon in Milwaukee. Please feel free to mark your calendar and stay tuned for further details! June Bike Race in Downtown Lansing Raises Money for Vets – On Saturday, June 22, the Capital Fund Title-Sinas Dramis Law Cycling Team hosted the second annual Festival of the Sun Bike Race in downtown Lansing. Two hundred riders from all over the state converged on the state Capitol grounds to compete on a 1.2 mile course that looped the Capitol building and the shops along Washington Avenue. Besides racing for prizes and fun, the race also served as a fundraiser for Lincoln Apartments, a permanent supportive housing facility for homeless veterans in Indianapolis. Great Lakes Capital Fund, Oakwood Construction, The Loomis Law Firm and Shinberg Insurance assisted as the primary sponsors of the event. August Traditionally, GLCF has hosted a lunch with some of our senior residents at one of our developments near Lansing, Michigan. This year we decided to include a couple more sites around our Midwest footprint. During the month of August, GLCF hosted three Senior Barbeque Days, with staff and families serving up good company and good eats.

GREAT LAKES CAPITAL FUND

G LCF NE WS

giving back

AVENUES TO AFFORDABILITY

GLCF Grants and Charitable Contributions Since Inception $14,000,000

$12,000,000

$10,000,000

$8,000,000

Grants

$6,000,000

Charitable Contribu=ons

$4,000,000

and volunteers. Colleagues serve on over 35 boards, including those of the Michigan Chamber of Commerce, the Indiana Affordable Housing Council, the New Markets Tax Credit Coalition, the Children’s Trust Fund, and the National Housing Trust. Countless others regularly fundraise for organizations and volunteer personal time to their communities, often rallying the support of the whole office. Asset Manager Mary Welch recounts how coworkers have been quick and eager to help her support an organization she is passionate about, Lansing’s Addiction Relief and Supported

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$2,000,000

1997

Investing is not enough. Even double bottom-lined investments only go so far in meeting a community’s many and varied needs. While we have invested more than $2.7 billion in housing and community development activities over the last 20 years, we also wanted to do more to support community causes and the missions of fellow nonprofit partners. As a nonprofit ourselves, we understand how central and also how challenging fund raising can be – especially under hard economic times. As such, we have also contributed over $12 million to date in charitable donations and grants, maintaining our giving even during the 2009-2011 downturn. These include grants to the Corporation for Supportive Housing, Habitat for Humanity, Greater Lansing Housing Coalition, and Riley Area Development. The spirit of giving runs all the stronger in our team members. Many times, colleagues have initiated office-wide drives to collect in-kind donations supporting one of our projects. We recently collected an entire car-full of over 400 books and over 100 non-perishable food items for the opening of senior housing development Ryker Reserve. Ryker’s Business Development Manager Dawn Gallaway replied that “the team was overwhelmed by the generous donation of nonperishable food items donated by Great Lakes during our Ryker Reserve Open House. The food pantry has already assisted residents who had a financially difficult week and just needed a little help. We greatly appreciate our relationship with the staff at GLCF!” At the individual level, GLCF colleagues contribute substantial personal time and energies to nonprofits as board members

Recovery (ARSR). A two-day fundraiser garnered $700 in personal contributions and a longer drive netted 6,000 recyclable bottles and cans. Mary notes that generous turnouts of support is quite common around the office: “everyone is just very passionate about the bottom line – the people we serve.” Giving may be the truest form of community membership and development. Looking towards the next 20 years, we strive to continue that giving. We strive to grow within our own communities and within the ones we help build.

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102 South Main Street Mt. Pleasant, Michigan 48858 Phone: (989) 772-3261 www.kmgprestige.com

For more details on how KMG Prestige can benefit your community contact

Karen Mead Vice President of Business & Development (989) 400‐4828 kmead@kmgprestige.com

E V ENTS & H A PPENING S

EXCITING NEW HIRES AND STAFF PROMOTIONS AS GLCF OPERATIONS EXPAND Tony Moulton, Debt Analyst, Capital Fund Services Capital Fund Services, a lending affiliate of GLCF, is happy to announce Tony Moulton’s full-time hire. Tony joined GLCF in May of 2012 as an Analyst Intern assisting the Underwriting department. Afterwards, he returned to Central Michigan University for his senior year where he received a B.S.B.A in Business Management. As a Debt Analyst for Capital Fund Services, Tony works in the Underwriting department.

Yulonda Byrd, Vice President, Asset Management Yulonda joined GLCF in 2007 as Interim Vice President, and is now “officially” responsible for overseeing the dayto-day operations of the Asset Management Department as Vice President. Yulonda has over twenty years of experience in the Financial Institution industry, including eight years in commercial loan underwriting.

Ryan Robinson, Vice President, Fund Management Ryan joined GLCF in 2011 as an asset manager, after working in accounting and financial service industries. In his new role, Ryan will add responsibilities related to the Fund Management of stabilized funds top of his asset management portfolio. Mark Erickson, General Counsel Mark joined GLCF in 2011 as an asset manager, after thirty years in the real estate and development industry. With the promotion to General Counsel, Mark will begin to shift his responsibilities full-time to handling the various legal responsibilities typical of General Counsel. Brett Oumedian, Controller GLCF welcomes Brett Oumedian as Controller for GLCF and its affiliates. Brett’s experience is well suited for this role, given his expertise in financial reporting, internal control systems, technical research and staff development. Brett has over 8 years of experience as a CPA at Plante Moran, the most recent as a manager of audit, review and tax engagements.

Covering all the angles.

[ It’s what we do ]

Community ReseaRCh services is a full-service community development consulting firm, with a strong background in real estate research, development consulting, and community revitalization.

We help you make informed decisions…with proven results!

www.CommunityresearchServices.com 301 N Clinton Ave P.O. Box 87 St. Johns, MI 48879 32

989 668 0600 phone 989 668 0602 fax kmurdock@cr-services.com

Connect with us on Facebook GREAT LAKES CAPITAL FUND

Dave Levinson, Chief Underwriter for Develop Michigan, Inc. Develop Michigan, Inc., an affiliate of GLCF, is pleased to announce the addition of Dave Levinson to the DMI staff. Dave s experience is well suited for this role, given the volume of industrial, retail, office, residential and mixed use projects he has underwritten during real estate career. His 24 years of experience prior to DMI includes deep financial markets experience with key accomplishments in commercial real estate lending for major national and international financial institutions as well as pension funds. Dave has experience underwriting loans in excess of $500 million across all commercial property types for securitized lending, agency and balance sheet platforms, including first mortgage and mezzanine financing.

20 Year Anniversary Reception

In March, GLCF celebrated 20 Years of investing in healthy, vibrant, sustainable communities with staff, board members and elected officials at Lansing’s “Old Town” Marquee. Dignitaries included Melissa Kaltenbach from Senator Stabenow’s office; Melissa Horste from Senator Levin’s office; Tony Baltimore, from Congressman Rogers’ office; State Senators Mark Jansen and Gretchen Whitmer, and State Representative Andy Schor. GLCF received tributes from both the Senate and House chamber, at both the state and federal level, in addition to a tribute from the City of Lansing.

Make sure your Address Book is up to date!

GLCF has recently moved our Lansing Headquarters and office. Our new address is 1118 South Washington Avenue, Lansing, MI 48910. All other contact information remains the same. GLCF’s continued development of the Lansing REO Town neighborhood comes at an exciting time as local public utility company, the Lansing Board of Water and Light, opens its new $180 million headquarters directly across the street

Karl L. Gotting Kenneth W. Beall Michael G. Oliva

Congratulations to Great Lakes Capital Fund on its First 20 Years

Jeffrey L. Green Kevin J. Roragen Richard W. Pennings Ted S. Rozeboom Tracey L. Lackman Michael G. Stefanko Elizabeth Husa Briggs

OVER 40 YEARS OF EXPERIENCE IN AFFORDABLE HOUSING Representing developers and syndicators before the Michigan State Housing Development Authority, U.S. Department of 124 W. Allegan, Suite 700 Lansing, Michigan 48933 Phone 517.482.2400

Housing and Urban Development, Rural Housing and municipalities, and with private lenders. Including: LIHTC, historic and new markets tax credits.

www.loomislaw.com

AVENUES TO AFFORDABILITY

ADVERTISER INDEX Baker Tilly Virchow Krause, LLP................................................. 2

KMG Prestige............................................................................ 31

Chesapeake Community Advisors, Inc...................................... 14

Loomis, Ewert, Parsley, Davis & Gotting, P.C............................. 33

Clark Hill.................................................................................. 19

Love Funding............................................................................ 15

Community Economic Development Association of Michigan... 20

McCartney & Company, P.C...................................................... 23

Community Research Services................................................... 32

Medallion Management, Inc...................................................... 24

Crestline Communities.............................................................. 19

MHT Housing, Inc.................................................................... 21

Dauby Oâ&#x20AC;&#x2122;Conner & Zaleski....................................................... 29

Michigan State Housing Development Authority....................... 34

Douglas Company..................................................................... 36

Milner & Caringella, Inc............................................................ 25

Economides Incorporated Architects......................................... 11

Oâ&#x20AC;&#x2122;Brien Construction Company, Inc.......................................... 35

FHLB Indianapolis.................................................................... 29

Pillar Capital Finance................................................................ 22

G. Fisher Construction.............................................................. 11

Plante Moran............................................................................. 13

Ginosko Development Company................................................. 4

St. James Capital....................................................................... 18

Keller Development................................................................... 13

Vogt Santer Insights................................................................... 25

Keystone Construction Corp..................................................... 24

Wolverine Building Group......................................................... 24

We assist in home ownership, affordable housing, urban renewal, and the fight against homelessness to create vibrant neighborhoods in a thriving state.

AffordAble rentAl Housing

HomeoWnersHip And Home improvement

Homelessness And supportive Housing

Communities, neigHborHoods And doWntoWn revitAlizAtion

Equal Housing Employer/Lender

MSHDA 7-5 x 4-75_color ad.indd 1

1/7/13 9:27 AM GREAT LAKES CAPITAL FUND

Great Lakes Capital Fund 1000 S. Washington Lansing, MI 48910 www.capfund.net

We build more than just affordable housing... ...We build award-winning communities!

Emerald Springs Development, winner of Affordable Housing Finance Magazine’s 2012 Readers’ Choice Awards

Single & Multi-Family

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Senior Communities

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Historic Rehabilitation

1716 Perrysburg Holland Rd | Holland, OH 43528 | Phone: 419.865.8600 | Fax: 419.866.8835 | www.douglascompany.com