Urban Land Institute
New Markets Tax Credits
and Hibernian Hall – A Case Study
May 26, 2009
Jeanne Pinado, Madison Park Development
Corporation
Peter Roth, New Atlantic Development
Andrea Daskalakis, Massachusetts Housing
Investment Corporation
Stephen Nolan, Nolan Sheehan Patten LLP
CONTEXT: MHIC + New Markets
Financing




MHIC is a private non-profit created 18+ years
ago to provide sources of sustainable capital
for housing and community development in
low-income, primarily minority neighborhoods
statewide
Mission focused initially on affordable housing,
primarily both debt and equity capital for
projects financed through the Low-Income
Housing Tax Credit (LIHTC)
MHIC viewed the NMTC as a vehicle for
complementing our >$900 million in
affordable housing to further our goal of
creating self-sustaining neighborhoods
Hibernian Hall represents one of our first 4
NMTC transactions and helped us to qualify for
nd
A Case Study: Roxbury Center for
the Arts at Hibernian Hall

Project had a history with MHIC
 MHIC provided acquisition financing in
2000.
 MHIC staff included the project in our first
NMTC application submitted in 9/2002
 Project was deemed a high priority by the
City and received a commitment of CDBG
funds.
 The Sponsor, Madison Park Development
Corporation, had raised substantial equity
capital through a capital campaign.
Roxbury Center for the Arts at
Hibernian Hall (cont.)

Project had major underwriting risks
 It was a spec building.
 A major portion of the building was a
performance venue that was a start-up
business.
 The project needed a conventional loan, but
no hard debt lender had been lined up.
 Madison Park had not completed its capital
campaign.
 The financing gap was substantial.
The Roxbury Center for the Arts at
Hibernian Hall (cont.)

Project also had strengths
 Sponsor had organizational depth,
experience in CRE, financial capacity and
operating strength.
 Sponsor had assembled a strong
development team.
 Sponsor was contributing $1.415 million in
capital funds.
 Sponsor had demonstrated that the project
met a critical unmet need in Roxbury.
 The City of Boston had committed $300,000
of CDBG funds as subordinate debt.
MHIC’s Approach to
Underwriting



Required Sponsor to master lease the property, in
addition to sub-leasing 3 spaces for its own use –
the 5,500 SF performance venue, the ACT Roxbury
space, and 3,500 SF of the basement space for its
Computer Technology Center.
Underwrote rents at below market rent levels.
Minimized hard debt to ensure a back-end take out
by maximizing the NMTC investment
 Maximized the utility of the “leveraged” NMTC financing
model.
 Converted a shallow tax subsidy to a deep one.
 Leveraged the value of the HTC.
 Result: generated NMTC equity = ~40% of TDC.
New Markets Leverage Structure
Business
Lender
Business
NMTC
Fund I
Investors
CDE
with
NMTC
allocation
Business
Business
Low-Income
Community
New Markets Leverage Structure
Business
Lender
Business
NMTC
Fund I
Investors
CDE
with
NMTC
allocation
Business
Business
Low-Income
Community
Leveraged Structure with HTCs:
Challenges






Convincing our public partners and hard debt lenders to
accept atypical collateral for CRE loan
Convincing our sponsors that the back-end unwind
worked for them.
Structuring the terms of the hard debt to meet the
requirements of the NMTC program
Creating a legal structure that worked – needed to
satisfy related party test
Overlaying additional business terms (e.g. capitalizing
the Master Tenant, developing lease terms)
Combining the regulatory requirements not difficult –
HTC driven by project costs and NMTC driven by
investment capital
Center for the Arts at Hibernian Hall –
The NMTC Financing







NMTC qualified equity investment (QEI) in CDE of $6.8
million
CDE First Mortgage Loan of $1.9 million
CDE Subordinate debt of $1.7 million
CDE Equity investment of $2.6 million
Sponsor: Madison Park Development Corp., CDC based in
Roxbury, existing MHIC customer
Acquisition and rehabilitation of 4-story, 35,000 sq. ft.
(24,000SF rentable) commercial building with ground floor
retail space, office space, and performance
venue/ballroom space.
MHIC New Markets grant-like equity and HTC equity: 38%
of total development costs (40% net of deferred
development fee)
Center for the Arts at Hibernian Hall
Sources and Uses

Sources
 Hard debt
 3rd party soft debt (CDBG)
 Sponsor Loans (NRC and foundations)
 General Partner capital (non-cash)
 Limited Partner capital
 CDE Deferred Payment Loan
 Master Tenant Security Deposit
 Deferred Development Fee
Total

$1,900,000
300,000
1,415,000
320,000
320,000
2,253,000
40,000
225,000
$6,773,000
Uses
 Acquisition
 Hard Costs
 Soft Costs
 Reserves
 Development Fee & Overhead
Total
539,000
4,259,000
1,173,000
137,000
665,000
$6,773,000
$122/GSF
$194/GSF
Types of Projects
Financed
Healthcare
Facilities
Arts Economy
Business
Finance
Community
Facilities
Mixed-Use
Pipeline to Utilize
Commercial
Coffin Lofts
New Bedford
Mixed-use w/affordable housing
Community: New Bedford
Units: 18
Sponsor: Hall Keen, LLC
New Markets Financing: $5,358,240
Closed Financing: March 2004
Construction Complete: December 2005
Lawton’s Corner
New Bedford
Mixed use w/affordable housing
Community: New Bedford
Units: 17
Sponsor: Hall Keen, LLC
New Markets Financing: $4,815,502
Closed Financing: March 2004
Construction Complete: December 2005
Lawton’s Corner,
New Bedford
Warren Palmer
Roxbury
Commercial – spec retail and office space
Community: Roxbury
Sponsor: Jubilee Christian Church
New Markets Financing: $8,376,661
Closed Financing: December 2004
Construction Complete: March 2006
Holyoke Health
Center
Community health center
Community: Holyoke
Sponsor: Holyoke Health Center
New Markets Financing: $18,920,896
Closed Financing: March 2005
Construction Complete: December 2005
Colonial Theatre
Pittsfield
Theatre and performing arts center
Sponsor: Colonial Theatre
New Markets Financing: $16,669,313
Closed Financing: January 2005
Construction Complete: July 2006
Project Hope
Boston
Non-profit community service center
Sponsor: Project Hope
New Markets Financing: $4,800,422
Closed Financing: January 2005
Construction Complete: August 2006
Project Place Gateway
South End, Boston
SRO housing, non-profit offices, restaurant
Sponsor: Project Place
New Markets Financing: $11,103,039
Closed Financing: November 2005
Construction Complete: March 2007
Egleston Power Station
Boston
Community access cable facilities
Sponsor: Urban Edge & Boston Neighborhood Network
New Markets Financing: $6,990,232
Closed Financing: December 2006
Construction Complete: October 2007
Atlantic Works
East Boston
Day care center, artists’ work spaces
Sponsor: East Boston CDC
New Markets Financing: $3,432,500
Closed Financing: December 2005
Construction Complete: December 2006
Cinema Center,
Pittsfield
• Rare Queen Anne
facade
• City priority for 8
years
• The building will
include:
• 6 state-of-the art
auditoriums (2 with
stadium seating), 1000
seats
• Restaurant
• Parking provided
behind complex
• Locating lobby in
adjacent building
affords more
concession and seating
area
Natural Kitchens
Brockton
Organic salad dressing company
Sponsor: Natural Kitchens, Inc.
New Markets Financing: $2,100,023
Closed Financing: June 2006
Construction Complete: June 2007
Chinatown Community
Education Center
Community education, training center, and school
Sponsor: Asian American Civic Association and
Kwong Kow Chinese School
New Markets Financing: $11,995,240
Closed Financing: June 2006
Construction Complete: September 2007
Marbury Terrace
Jamaica Plain
Food service center, classrooms, non-profit offices
Sponsor: Community Servings, Inc.
New Markets Financing: $4,809,965
Closed Financing: August 2006
Construction Complete: June 2007
Nuestra Casa
Lawrence
Community education center
Sponsor: Lawrence CommunityWorks
New Markets Financing: $5,520,746
Closed Financing: September 2006
Construction Complete: September 2007
Dudley Village
North Roxbury
Affordable rental housing and commercial space
Sponsor: Dorchester Bay EDC
Acquisition Financing: April 2003
LIHTC Financing: $4,038,767
New Markets Financing: $1,653,067
Closed Financing: December 2006
Construction Complete: August 2008
Boston Health Care
for the Homeless
Health care center and respite facility
Sponsor: Boston Health Care for the Homeless
New Markets Financing: $20,948,716
Closed Financing: December 2006
Construction Complete: March 2008
Jean Yawkey Place
Boston Health Care for the Homeless
Fenway Community
Health Center
Community health center (in mixed-use development)
Sponsor: Fenway Community Health Center
New Markets Financing: $9,500,000
Closed Financing: December 2006
Construction Complete: March 2009
Hanover Theatre
Worcester
Performing arts theatre
Sponsor: Chelsea Neighborhood Developers
Loan: $4,009,900
New Markets Financing: $13,585,000
Closed Financing: August 2007
Construction Complete: March 2008
Hibernian Hall
Roxbury
Community: Roxbury
Sponsor: Madison Park CDC
New Markets Financing: $6,303,208
Closed Financing: March 2004
Construction Complete: March 2005