MARYLAND ECONOMIC DEVELOPMENT CORPORATION
MEDCO BOARD OF DIRECTORS

Legislation

The Maryland Economic Development Corporation (MEDCO), which functions under the provision of Article 83A, Sections 5-201 through 5-216 of the Annotated Code of Maryland 1984, as amended in 2002, is a body politic and corporate and is constituted as a public instrumentality of the State of Maryland. “The General Assembly declares and finds that Maryland’s economy continues to experience technological change and restructuring. The General Assembly recognizes that, while technological change sometimes results in economic contraction and dislocation, it also affords opportunities to expand productive employment and to expand the State’s economy and tax base.” (§5-202) The purpose of the Corporation is to assist in the expansion, modernization and retention of existing Maryland business and to attract new business to the State. The Corporation also assists, upon request, local jurisdiction projects. The Corporation borrows money and issues bonds for the purpose of financing assistance.

MEDCO structures its transactions on a non-recourse basis. Neither the State of Maryland, state agencies, nor MEDCO are responsible for the repayment of the bonds that are issued by MEDCO.

Operations

Since fiscal year 1995, there has been a significant increase in MEDCO business. Assets (and number of projects) have increased as shown by the following chart:

MEDCO is staffed with six fulltime employees and two part-time employees. MEDCO’s responsibilities are ongoing for transactions on its books. Maintaining financial records, including MEDCO’s monthly balance sheet and income statements, are a significant portion of the ongoing work requirements. MEDCO also ensures that various requirements of the Internal Revenue Service, the Securities and Exchange Commission and other legal requirements of the transactions are being met by the borrower/lessor. These requirements include making certain that current financials of the borrower/lessor are available and that current and appropriate insurance requirements are being met. Transactions between the Corporation and the Maryland Department of Business and Economic Development may also include requirements that job counts and other performance criteria are collected from the borrowers/lessors and validated in order to ensure that borrowers/lessors meet the financial covenants of transactions.

MEDCO has a web site which went live in August 2004. The site lists all of MEDCO’s projects, MEDCO’s financials, descriptions of many MEDCO projects, a list of our Board Members, and other useful information at http://www.medco-corp.com/.

In 2004, MEDCO has been able to provide tax-exempt financing for two (2) manufacturers, one (1) transportation entity, five (5) not-for-profit entities, and three (3) projects requested by either state or local government. MEDCO also financed one (1) federal project with taxable bonds. Here is a list of the projects initiated during the 2004 fiscal year:

1. Your Public Radio Corporation (WYPR) On April 13, 2004, MEDCO issued its tax-exempt revenue bonds in the amount of $5,800,000 and loaned the proceeds to WYPR, a Maryland nonprofit corporation, and/or its affiliated or related business entities. The proceeds will be used to finance or refinance the acquisition of radio broadcasting licenses, transmitting equipment, transmitting facilities, and other real and personal property used in the broadcasting business which is to be owned by Your Public Radio Corporation, or its affiliated or related business entities, located in Baltimore City and Frederick County, Maryland. The proceeds will also be used to finance issuance costs of the Bonds, to finance interest rate protection and hedge agreements.
   
   WYPR’s mission is to broadcast programs of intellectual integrity and cultural merit that enrich the minds and spirits of its listeners and strengthen the communities it serves. WYPR is devoted to remaining noncommercial in spirit and practice; adhering to a high standard of journalistic and artistic excellence; delivering educational, informational, cultural and entertainment programming; and serving as a public service to is broadcasting audience. More information on WYPR can be found online at http://www.wypr.org/ .
   
2. The Bechdon Company, Inc. On June 21, 2004, MEDCO issued its tax-exempt demand revenue bonds in a principal amount of $4,500,000 on behalf of The Bechdon Company, Inc. Projects. MEDCO loaned the proceeds of the bonds to The Bechdon Company, Inc. which will be used for the: (a) acquisition and installation of new machinery and equipment; (b) constructing certain capital improvements at the precision machining and manufacturing facility; and (c) pay various expenses in connection with the authorization, issuance, sale and delivery of the bonds at the Project located in Prince George’s County, Maryland. The bonds were privately placed with Mercantile Bank.
   
   The Bechdon Company, Inc has been serving the Commercial, Aerospace, Defense, and Industrial manufacturing community since 1966. The Bechdon Company’s large modern facility in Upper Marlboro, Maryland, was built in 1990. Encompassing 53,000 square feet, it houses over 100 pieces of equipment. The company offers a broad range of large and small precision machining, utilizing both manual and CNC technology. Large welded fabrications, including precision frames, custom vacuum chambers, and related components are manufactured at the company’s facilities. The company also offers Helium leak testing as part of its vacuum technology services, as well as painting and chemical film processes to both Mil-Spec and industrial requirements. More information on The Bechdon Company, Inc. can be found at http://www.bechdon.com/ .
   
3. University of Maryland Alumni Association, Inc. On July 11, 2003, MEDCO issued it non-recourse, limited obligation economic development revenue bonds in the amount of $11,270,000 to provide financing for acquisition, construction, furnishing and equipping by the University of Maryland Alumni Association, Inc. of an alumni center facility consisting of two buildings. The two buildings contain approximately 69,000 square feet in aggregate, including garden and patio areas, on an approximate 2.3-acre parcel of land located on the main campus of the University of Maryland College Park in Prince George’s County, Maryland. Total project costs are estimated to exceed $30,000,000. The Alumni Association will use the buildings, garden and patio areas as an alumni center in its mission to support and promote the University. The bonds were privately place with a related party of Riggs Bank, Washington, D.C. The term of the bonds is 30 years.
   
   The mission of the University of Maryland Alumni Association is to support and promote the university in its pursuits of excellence in teaching, research and public service and to foster a spirit of loyalty, involvement and lifelong commitment to the University of Maryland College Park by its alumni. More information on the University of Maryland Alumni Association can be found at http://www.alumni.umd.edu/ .
   
4. Laboratory for Telecommunications Sciences. On July 23, 2003, MEDCO issued $28,160,000 in taxable non-recourse lease revenue bonds for the Laboratory for Telecommunications Sciences Project. MEDCO will construct, own and lease the facility to the Department of Defense. MEDCO will lease an approximately 15-acre unimproved parcel of land from the University of Maryland, College Park and construct an approximately 85,000 square foot building including parking spaces and other improvements. The Department of Defense will lease the facility for an initial period of twenty years, coinciding with the debt, and a one-time five year renewal. At the expiration of the 25-year ground lease, the project will be owned, at no cost, by the University of Maryland, College Park. The project will pay the University of Maryland, College Park an annual ground rent. The uninsured bonds were rated “AA” and “AA2” by Standard and Poor’s and Moody’s Investor Services, Inc. respectively. The bonds have been insured by AMBAC and carry an “AAA” and “Aaa” Standard and Poor’s and Moody’s Investor Services, Inc. respectively. The bonds are for a period of 20 years.
   
   More information on the Department of Defense can be found at http://www.defenselink.mil/ .
   
5. UNIVERSITY OF MARYLAND, COLLEGE PARK – South Campus Phase II. On July 25, 2003, MEDCO issued its non-recourse limited obligation revenue bonds in the amount of $51,885,000 for the purpose of financing all or part of the cost of (a) a two-phased student residential housing project and related facilities, (i) Phase I to provide one residential building for approximately 217 students, and (ii) Phase II to provide two residential buildings for approximately 570 students, to be constructed on a parcel or parcels of land located on the campus in College Park, Prince George’s County. The land will be ground leased to the MEDCO by the State of Maryland for the use of the University System of Maryland, and (b) certain furnishings, machinery and equipment to be located in, and used in connection with, such student residential housing project. Phase I which was previously financed by MEDCO in 2000 will open in August 2003. Significant demolition was part of the Phase I project. Phase II will be available for students in August 2004. The bonds have been rated “Baa3” by Moody’s Investor Services, Inc. The term of the bonds is 32 years.
   
   More information on University of Maryland, College Park- South Campus Phase II can be found by searching the university’s website at http://www.umcp.umd.edu/ .
   
6. AFCO Cargo BWI II LLC Refunding Bonds. On December 4, 2003, MEDCO issued $2,690,000 in tax-exempt non-recourse refunding bonds for the AFCO Cargo BWI II LLC Project that represent a portion of the original bond issue. . In 2002, MEDCO issued revenue bonds the amount of $7,000,000. The transaction provided that proceeds of the funds be used for (a) the purpose of paying a portion of the costs, or the reimbursement of a portion of the costs, of the acquisition, development and construction of airport facilities located on the grounds of BWI Airport, constituting a portion of the Midfield Cargo Complex at BWI Airport, and consisting of (i) a cargo building known as “Cargo Building G”, containing approximately 60,000 square feet of warehouse space, and (ii) approximately 114,500 square feet of aircraft parking ramp, (b) a portion of the proceeds of the Series 2000 Bonds were used for the costs of issuance of the Series 2000 Bonds, and (c) the Phase II Facilities (which Phase II Facilities include the Series 2000 Facilities), together with the Phase I Facilities and any Additional Facilities were leased by MEDCO to the Company pursuant to the terms and conditions of the Lease Agreement. The bonds were placed through Robert W. Baird & Company and are due on July 1, 2024.
   
   Aviation Facilities Company, Inc. (AFCO) is a Virginia Subchapter S corporation which was formed in May 1992 as a full-service real estate development and management organization specializing in airport and other transportation-related facilities such as air terminals, air cargo, air hangar, marine cargo terminals and intermodal transportation facilities. AFCO invests in the properties, provides opportunities for its stockholders and others to invest in the properties, and manages those project assets after their development. AFCO has become the leading developer of air cargo facilities in the United States and currently operates or has under development over 7 million square feet of buildings and aircraft apron at over twenty airports around the world. More information on AFCO can be found at http://www.afcoinc.com/ .
   
7. The American National Red Cross. On December 4, 2003, MEDCO issued $4,250,000 in tax-exempt non-recourse bonds for the benefit of the American Red Cross together with its local unit, the Central Maryland Chapter of the American Red Cross. The “Chapter” has requested financial assistance from MEDCO through the issuance of tax-exempt revenue bonds to finance (a) a project on behalf of the Chapter (the “Chapter Project”) consisting of the acquisition of approximately 4.4 acres of land, together with the construction and equipping thereon of an approximately 30,000 square foot office facility to be used in connection with the services local emergency, relief and other services of the Chapter, and (b) a project on behalf of the Red Cross (the “National Project”) consisting of the renovation and equipping of existing property currently occupied by the Chapter for use by the Red Cross in connection with the biomedical services of the Red Cross, including the acquisition of equipment and vehicles. The Chapter Project will be located in the City of Baltimore. The National Project is also located in the City of Baltimore. The bonds were placed with JP Morgan Chase Bank in a national program for all of the American Red Cross’ financings. The bonds have an expected maturity of approximately 18 years.
   
   The American Red Cross, a humanitarian organization led by volunteers, guided by its Congressional Charter and the Fundamental Principles of the International Red Cross Movement, will provide relief to victims of disasters and help people prevent, prepare for, and respond to emergencies. More information on the American Red Cross can be found at http://www.redcross.org/ .
   
   The American Red Cross, Central Maryland Chapter (ARC-CMC) was founded in 1905 as part of the American National Red Cross, the nation's foremost humanitarian organization. The Central Maryland Chapter has a proud history of providing emergency disaster relief, services to members of the Armed Forces, blood services and health and safety programs for all ages. In 1999, the chapter was one of the first agencies to meet the Standards for Excellence of the Maryland Association of Nonprofit Organizations. More information on ARC-CMC can be found at http://www.redcross-cmd.org/ .
   
8. Blind Industries and Services of Maryland, On November 12, 2003, MEDCO issued $10,000,000 in non-recourse, variable rate, tax-exempt economic development bonds on behalf of the Blind Industries and Services of Maryland Project. The Project consists of (a) financing the acquisition, construction and renovation of manufacturing and office facilities located in Baltimore County, Maryland (the “Baltimore Project”), (b) refinancing the acquisition of manufacturing and office facilities located in Wicomico County, Maryland (the “Salisbury Project”), and (c) financing capitalized interest on the Bonds and certain costs relating to the issuance of the Bonds. Bank of America provided a letter of credit for the 25-year (2028) bonds. The transaction received an AA1/VMIG1 rating from Moody’s.
   
   Blind Industries and Services of Maryland (BISM) is leading the way to greater opportunity for Maryland citizens who are blind or visually impaired. BISM, through the diverse skills and dedication of an exceptional team and a nationally recognized resource center, each year serves over 2000 individuals with innovative rehabilitation and training programs that put people on the road to independence. As a major manufacturer and retailer of quality goods, BISM is the employer of choice for over 250 associates who work in its ten facilities across Maryland, Delaware and the District of Columbia. BISM is a participating agency in the Javits-Wagner-O'Day (JWOD) Program, and a direct source for more than 2000 quality SKILCRAFT products made by Americans who are blind or severely disabled. More information on Blind Industries and Services of Maryland can be found at http://www.bism.org/ .
   
9. Goodwill Industries International, Inc. (Goodwill) MEDCO issued its non-recourse, limited obligation revenue bonds in the principal amount of $4,000,000 on behalf of the Goodwill Industries International, Inc. The Project will consist of an over 42,000 rentable square foot, two story, above grade office building under construction on land located in Rockville, Maryland. Goodwill intends to occupy the majority of the building and one or two taxable tenants will occupy approximately 10,000 square feet. The facility is expected to reach substantial completion in January 2004. Goodwill has executed a commitment letter to provide underwriting, remarketing and credit enhancement for the Bonds. The portions of the facility to be occupied by Goodwill (along with certain fixtures, furniture and equipment) will be financed with tax‑exempt bonds. The portions of the facility to be occupied by tenants will be financed with equity or taxable debt. Bond proceeds will also be used to pay a portion of the administrative, legal, financing, and miscellaneous expenses related to the issuance of the bonds.
   
   Goodwill Industries International is a network of 207 community-based, autonomous member organizations that serves people with workplace disadvantages and disabilities by providing job training and employment services, as well as job placement opportunities and post-employment support. With locations in the United States, Canada and 23 other countries, Goodwill helps people overcome barriers to employment and become independent, tax-paying members of their communities.
   
   To fund its mission, Goodwill collects donated clothing and household goods to sell in 1,900 retail stores and provide contract labor services to business and government. Goodwill also receives funding from donations and corporate, foundation and government grants. Nearly 85 percent of Goodwill’s revenues are channeled into job training and placement programs and other critical community services. I n 2003, Goodwill Industries International served 616,830 individuals.
   
   More information on Goodwill Industries International can be found at http://www.goodwill.org/ .
   
10. Hardwood Mills, Inc. MEDCO issued its tax-exempt revenue bonds in the amount of $3,000,000 on behalf of Hardwood Mills, Inc., Queen Anne’s County, Maryland . MEDCO loaned the proceeds of the bonds to Hardwood Mills, Inc. which will be use for (a) construction of a building or structure containing approximately 48,000 square feet to be used for the milling of logs on land owned by the company; (b) the acquisition and installation of new machinery and equipment for milling logs; (c) the acquisition and installation of software and other equipment, as may be necessary or useful to support, operate and maintain the new equipment; (d) capitalized interest, if any, during the construction period and other eligible capital expenditures; (e) the construction and installation of additional improvements, both on-site and off-site and appurtenances, as may be necessary or useful to install and operate the building and new equipment; (f) the hiring of professionals and consultants as necessary or desirable for the preliminary design and the execution of the project including, but not limited to architects, landscape designers and architects, engineers, financial advisors, underwriters, lawyers, accountants, and other types of consultants selected by Hardwood Mills, Inc. , or any of the contractors associated with the Project; The bonds have a variable rate of interest, are privately placed, and have a maturity in 2016. More information on Hardwood Mills, Inc. can be found at http://www.hardwoodmills.com/ .
    
11. Bowie State University. MEDCO issued its tax-exempt, non-recourse, student housing revenue bonds in the amount of $22,000,000 on behalf of Bowie State University. Bowie State University requested that MEDCO issue its non-recourse, limited obligation revenue bonds for the purpose of financing all or part of the cost of (a) a student residential housing project to provide residential housing for approximately 500 students, and related facilities, to be constructed on a parcel or parcels of land located on the Project Applicant’s campus in Prince George’s County, Maryland, which will be ground leased to the Corporation by the State of Maryland for the use of the University System of Maryland on behalf of its constituent institution, Bowie State University, (b) certain furnishings, machinery and equipment to be located in, and used in connection with, such student residential housing project, (c) other related costs, including closing costs, associated with the acquisition, construction, furnishing and equipping of the Project and the financing of such costs, including the funding of capitalized interest and any required reserve funds, (d) own the Project, and (e) use and operate the Project for the purpose of providing residential housing for the Project Applicant’s students. The bonds were rated Baa3 by Moody’s Investment Services, Inc. The term of the bonds is 30 years. More information on Bowie State University can be found at http://www.bowiestate.edu/ .

One Maryland

In 2000, MEDCO initiated the first projects under the One Maryland Program. In 2004, MEDCO continued to work on existing projects. The One Maryland Program is funded by the Maryland Department of Business and Economic Development and provides economic development assistance to economically distressed jurisdictions. Presently, Allegany County, Garrett County, Dorchester County, Worchester County, Caroline County, Somerset County and Baltimore City are eligible for One Maryland Program assistance.

1. MEDCO continues to work with Allegany County to develop the Barton Farms Industrial Park south of Cumberland on US Route 220. The project includes land acquisition, permitting, providing all utilities including water and sewer, and site preparation. Allegany County has limited industrial land for industrial use that has access to water and sewer service. In June of 2004, approximately 40 acres were sold to American Woodmark, which is locating a new assembly operation to this site and creating 500 new jobs.
   
2. Construction is complete in Princess Anne, Somerset County, of a 30,000 square foot industrial shell building in an industrial park that has seen limited economic success. MEDCO contracted to have the building designed and built. General Dynamics Network Systems, Inc., a Massachusetts based company that designs and operates wireline and wireless networks for commercial and governmental customers, is leasing approximately 2,500 square feet of the shell building. The county continues to market the building.
   
3. Construction of a 43,000 square foot industrial shell building in Pocomoke City, Worcester Countyis complete. MEDCO contracted to have the building designed and built. The project provides the town and county with new marketable flex space. Mid-Atlantic Foods, a Maryland corporation specializing in canned seafood, is leasing approximately 10,000 square feet of the building. In addition, Swales Aerospace, a Maryland corporation providing flight hardware and flight load analysis for unmanned and manned space flight , is leasing approximately 2,500 square feet of the shell building. The county continues to market the building.
   
4. MEDCO assisted in constructing in Baltimore City a 514-space parking garage opened in November of 2003. The 210 St. Paul Street Garage is located between Charles Street and St. Paul Place and assists in retaining CitiFinancial in the City and provides general parking. This project was completed and turned over to the City of Baltimore.
   
5. The Fleet-Eden Garage, located in east Baltimore City, is under construction and will serve Sylvan Learning Systems as well as providing needed parking in Inner Harbor east neighborhood. Design and environmental work have been completed. Construction is expected to finish in June 2005.
   
6. Construction of a 30,000 square foot building (expandable to 50,000) in Mountain Lake Park, Garrett County in the County’s Southern Garrett Industrial Park is complete. MEDCO contracted to have the building designed and built. The County lacks available industrial buildings for immediate occupancy and this building assists in adding needed flexible/industrial space to the county inventory.
   
7. MEDCO assisted Garrett County by purchasing land just off Interstate 68 for the purpose of developing a new industrial park. The County has no industrial land available in the northern part of the County for development. The new park, Keyer’s Ridge, could have up to 261 acres of developable land. Environmental, survey and purchase negotiations are complete and preliminary engineering is underway.
   
8. Construction of a 30,000 square foot building (expandable to 80,000) in Cambridge, Dorchester County, with MEDCO’s assistance, was completed in September 2004. The County lacks available industrial buildings for immediate occupancy and this building assists in adding flexible/industrial space to the county inventory. MEDCO is in the process of discussing a lease and/or possible sale with an interested party.

Higher Education Financing

Due to the State’s scarce capital resources in 2002, Maryland’s colleges and universities turned to student housing revenue bonds to enable them to construct necessary student/dormitory housing that did not use the credit of the State. Because the Internal Revenue Service raised certain questions regarding the ownership of student housing projects by out-of-state not-for-profit student housing foundations, MEDCO not only issued the student housing revenue bonds but also owns several of the facilities until the debt is retired. In all instances but one, the University System will ultimately own these facilities. The Internal Revenue Service has recently agreed that out-of-state not-for-profit student housing foundations are eligible to own and operate projects in Maryland as elsewhere.

Owned by MEDCO – To be Owned by University System when Debt is Extinguished

• University of Maryland, Baltimore County – $37,500,000 – 581 beds
• Frostburg State University, Allegany County - $17,915,000 – 400 beds
• University of Maryland, Baltimore - $34,400,000 – 337 beds
• Bowie State University, Prince George’s County - $21,470,000 – 470 beds
• University of Maryland, College Park - $51,885,000 – 788 beds
• Salisbury University, Wicomico County - $16,410,000- 312 beds

Owned by MEDCO – Will be Owned by Sheppard Pratt Health System

• University Village at Sheppard Pratt, Baltimore County - $27,725,000 – 615 beds

Owned by MEDCO- Will be owned by Morgan State University

• Morgan State University, Baltimore City - $38,025,000 – 796 beds

Previous “Issuance Only” Student Housing Bond Issues

• University of Maryland, College Park – University Courtyard
• University of Maryland, College Park – South Campus
• Salisbury State University – Collegiate Housing Foundation
• Towson State University – Collegiate Housing Foundation
• Allegany College – Somerset Educational Foundation
  

Current Projects

Some representative projects currently being worked on include:

1. Dorchester County and MD DBED have requested that MEDCO acquire and develop land for an industrial park near Cambridge. The County, through MEDCO’s actions, has utilized the last building site in the Dorchester County Industrial Park. The County will assist MEDCO in the acquisition of the land and utilize state funds to develop the park. MEDCO continues to hold option on the property and is engineering the site to establish feasibility.
   
2. The United States Pharmacopeial Convention, Inc. (USP), Rockville, Montgomery County, MD has requested MEDCO to issue tax-exempt bonds. The funds would be used primarily to renovate an existing 69,000 square foot building, to construct a new 141,000 square foot building, and to construct a new 16,000 square foot conference center. The USP provides standards for more than 3,800 medicines, dietary supplements, and other health care products.
   
3. The Associated Catholic Charities, Inc has asked MEDCO to issue tax exempt bonds to finance the renovation of seven buildings at the St. Vincent Center Baltimore County. Renovations will include the demolition of one building, the construction of two new buildings, relocation of a swimming pool, and the purchase of furniture, fixture and equipment that may be necessary. This will be the third bond issuance MEDCO will issue on behalf of Associated Catholic Charities. The bond issuance is scheduled to close by the end of October 2004.
   
4. Associated Jewish Charities has asked MEDCO to issue tax exempt bonds on behalf of The Associated Jewish Charities. The proceeds received by MEDCO from the sale of these bonds would be loaned to THE ASSOCIATED: Jewish Community of Baltimore, Inc., a Maryland nonstick corporation, to finance and refinance the costs of certain capital projects.