Orientation to the Capital Markets for Financing Community

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Orientation to the Capital Marketsfor Financing
Community Economic Development Practical
Innovation using existing resources,
partnerships and collaborations in Texas to
advance Mission and Sustainability

• Adding Fee-Based businesses to our Portfolio
• Getting Local Banks to participate in CRA
  Mezzanine Pool
• Bringing Financial Technical Assistance to the
  CDC practitioners with concentration in
  Commercial Real Estate Finance
• Monetizing NMTC Use Dead Assets / Bequeathed
  Assets / Vacant Lots for Collateral Pool to
  increase credit quality
• Presented to CDFIs CDCs of Texas _at_ Federal
  reserve Bank of Dallas at Houston, 2005

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HOW DO WE STAY AFLOAT WHEN the SEA is so ROUGH?
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Which way should we go ?
SCALE ? MERGE ? Hunker down ? POOL ? FOLD
? DIVERSIFY ? New Products ? EXPERIMENT
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To Achieve Scale in Texas

• We must first achieve sustainability
• maximize our use of subsidy
• thinking must shift from product Innovation to
  product Delivery

Source Aspen Institute New Pathways to Scale
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Challenges to the Texas CDFI / CDC Industry

• Overcome Disruptive effect of subsidy
• Build a stronger connection to the customer
• Improve Strategic positioning within the
  Financial services marketplace
• Build a strong connection to the Mainstream
  Financial institutions, incl. Insurance
  Mortgage
• Creation of a viable Network that can take the
  industry to scale
• Effective Branding, communications clout

Source Aspen Institute New Pathways to Scale
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Scale Sustainability

• Sustainability must be first foremost
• Do your service cheaper, better, quicker.
  Simplify. Control the point of sale (Quality)
• Local, Local, Local
• Scale is about doing one thing very, very well
• A subsidized financial institution does not exist
  anymore

Source State Employees Credit Union
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Unified The Coop Model

• Develop maintain distribution channel to
  compete with larger competitors
• Become a virtual chain
• Provide right products and services to
  independent orgs to help them grow prosper over
  time

• Success is dependent upon the success of member
  CDFIs CDCs
• Realize economies of scale
• Eyes ears of channel
• Buying Power
• Warehousing
• Technology
• Hire right expertise
• Merge, Grow, cooperate

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POOLING for Predevelopment Dollars for
Offsetting Costs Expenses

• Each participating member makes nominal equity
  investment hires firm to raise concessionary
  rate capital for LLC from banks, insurance cos
  and foundations. E.g SEA Corp
• Pooling for expense sharing Accounting, Legal,
  Development, technology, servicing

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Collaboration / Pooling 2
P
P
P
Collaboration / Pooling 1
Collaboration / Pooling 3
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TEXAS COLLATERAL FUNDUse DEAD ASSETS as part of
WSWW Pilot Programs

• Partnership with
• Land Source
• Corporate Excess Inventory
• Bequeathed Assets

www.wallstreetwithoutwalls.com
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• Texas Land Source
• Collateral Pool for Minority Businesses

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TEXAS MEZZANINE FUNDParticipating Texas Banks
REIT Statewide Competition for Results

• Formation of REIT by participating Texas Banks
• Statewide IMPACT Awards
• Coordinated Deal FLOW
• CD Product Development

www.wallstreetwithoutwalls.com
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MEZZ
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Pilot Programs in Texas Can we afford to
experiment ?

• Use Dead Assets Bequeathed Assets Vacant Lots
  for Collateral Pool
• Use Corporate Inventory to Monetize New Market
  Tax Credits (NMTC)

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Texas Corporate Dead Inventory Liquidation
CDE Investment

Harley Davidson A.O. Smith Corporation Brady
Corp. Texas Electronics Corp Eaton Corporation
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To Monetize CD Assets Bring Liquidity to Texas
- Tie into National Network of Aggregators,
Originators
LIIF Child Care Facilities
IMPACT Multifamily
CRF Economic Dev. Loans
Banco ITIN Mortgages
Wv-CAPco 504 Loans
Self-Help Single family
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Texas Future Resources Options

• TACDC manage Virtual Chain economies of scale
• Appeal to Private Community foundations as
  group
• Energize local banks to fund in Texas Mezz Fund
• Energize private client groups w/ CD product
• Organize Texas Universities Pool Bequeathed
  Assets
• Coordinate Network of Texas Mayors Pooling
  vacant lots for Collateral to CD transactions
• Organize group of Texas Corporations to Monetize
  Dead Inventory exchange for NMTC

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What Lessons Do we learn from Noahs Ark ??
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Eight Axioms learned from NOAH the ARK
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What Big Idea under the Texas Sky will bring
sustained prosperity to the hard working
communities in Texas ?