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Tax Credit Advisor: Sample Issue
Untitled Document
Table of Contents
May 2011
Issue Theme: Structuring the Deal
Low-Income Housing Tax Credit
Historic Rehabilitation
New Markets Tax Credit
Columns
Other
Foundations: Hard to Find, But Definite Possibilities
Everyone has heard of the Gates Foundation, the Ford Foundation, and the John D. and Catherine T. MacArthur Foundation. But daresay, a much smaller universe knows of the Harry and Jeanette Weinberg Foundation, based near Baltimore, Md.; the Hyams Foundation, Boston; or the Marin Community Foundation, in the San Francisco Bay Area. While they can be hard to track down, certain lesser known foundations – regional and local – can be a source of potential gap financing for affordable rental housing and LIHTC projects. While the dollars they award may be a fraction of a project’s total development cost, as they say, every dollar counts….
NSP Dollars: Just the Ticket for LIHTC Developers
Federal Neighborhood Stabilization Program dollars, especially those from the second funding round (NSP2), can be an attractive source of funding for affordable multifamily rental housing projects, including those using low-income housing tax credits, panelists advised at the National Housing & Rehabilitation Association’s recent 2011 Annual Meeting. They said many NSP2 grantees still have funds available to commit and are looking for eligible projects….
Wildflower Terrace: Blooming from Austin’s Former Airport, Owls and All
In real estate development, sometimes you have to do whatever it takes – even if that means moving a family of owls. But more about that later. The owls are just part of the story of Wildflower Terrace, a mixed-income tax credit apartment development for seniors 55 or older rising from the ground in Austin, Texas. The nearly $29 million project, sponsored by Austin-based DMA Development Company, is part of a new “urban village” – named Mueller – being created from scratch on 711 acres on the site of the city’s former close-in Robert Mueller Municipal Airport, which closed in 1999….
A (Still) Fine Spring: LIHTC Investors Continue to Ante Up Despite Falling Yields
Yields continue falling and credit prices continue rising but investor demand for low-income housing tax credit investments remains strong, say industry officials. Their primary worry is whether yields will drop too much further. But some expect yields and prices to level off in the next few months to provide equilibrium. The LIHTC market’s health is evidenced by a spate of syndicators’ corporate multi-investor tax credit funds that have closed recently or are now on the street….
Corporate Tax Credit Fund Watch (chart)
Copeman Developing New LIHTC Study
Industry sage Fred Copeman of Reznick Group is working on a new, comprehensive study of the performance of low-income housing tax credit investments and the performance and traits of the underlying properties. It will be the first by Copeman since five prior similar studies he did while at Ernst & Young LLP. “We expect to have something in print in September,” says Copeman, who notes the study is being done by Reznick Group in concert with IntegraTec….
Priming the Pump: Michael Costa’s Big Transaction to Create New LIHTC Deals for Years to Come
You can’t accuse Michael Costa of thinking small. The housing veteran is sifting through a $3.4 billion portfolio of 276 low-income housing tax credit projects in 33 states and Puerto Rico to create a stream of new tax credit development deals – for years to come The third-generation Californian is rounding up consents from investors and lenders associated with the properties in the portfolio, which is under contract to be purchased from Citibank. Costa, president and CEO of MacFarlane Costa Housing Partners (MCA), Gardena, Calif., is also president, CEO, and managing member of two other new companies – Highridge Costa Investors, LLC (HCI) and Highridge Costa Housing Partners, LLC (HCP). Costa expects HCI to close its purchase of the portfolio from Citibank within the next few months….
Lessons from TCAP and Exchange: State Agencies Move Forward Without the Extra Dollars
How are state housing credit agencies coping without the massive extra dollars that the Tax Credit Assistance Program and Section 1602 exchange program once provided? What lessons did they learn? Did their experiences foster any lasting changes to their low-income housing tax credit programs? The TCAP and exchange programs, established by the American Recovery and Reinvestment Act (ARRA) enacted in February 2009, provided a lifeline to state HCAs and the LIHTC industry that tided them through the dark, angst-filled days of the market downturn, when tax credit prices tumbled, the supply of investor equity shrank, some syndicators stumbled, and more than a few developers skinned their knees….
Springtime in Washington: The Budget Knives Come Out
Springtime in Washington, D.C. this year means budget frenzy – and the knives are out taking aim at housing. On April 15, President Obama signed an omnibus appropriations bill (H.R. 1473) for the fiscal year ending September 30 (FY 2011) that significantly cuts funding levels for many federal housing and community development programs compared to FY 2010. This may be just the first body blow, though. On April 15, the GOP-controlled House of Representatives approved a budget resolution for FY 2012, developed by Budget Committee Chairman Paul Ryan (R-Wisc.), that calls for massive spending cuts and tax reforms. President Obama has outlined his own deficit reduction proposal….
In Play: Appeals Court Decision Spurs Concerns About Bifurcated Transactions With State Tax Credits
In a decision with broad implications for the tax credit syndication industry, the U.S. Court of Appeals for the Fourth Circuit has sided with the Internal Revenue Service and overturned a U.S. Tax Court decision that affirmed the validity of transactions in which Virginia state historic rehabilitation tax credits were allocated to investors with very small interests – of short duration – in upper-tier investment partnerships. Some believe the decision could alter the structuring of future transactions with allocated state tax credits of all types, whenever the state and federal tax credits are “bifurcated” – allocated to different investors.
The Time Is Now: Coalition Prepares for Introduction of Historic Tax Credit Modernization Bill
The Historic Tax Credit Coalition (HTCC) is laying the groundwork for the introduction of legislation this spring to modernize the federal Historic Tax Credit (HTC). This year’s bill will include provisions clustered around the themes of promoting the syndication of small transactions, providing incentives for energy efficiency in historic property rehabilitation, eliminating federal taxation of the proceeds of state HTC transactions, and promoting nonprofit sponsorship of historic rehab in low-income census tracts….
A Spectrum of Service: Diverse Projects Reflect Flexibility of New Markets Program
A nursing care wing in a remote part of Alaskan, a rejuvenated paper mill in rural Wisconsin, and a social services center in an Oregon suburb may not seem to have much in common. The unifying thread is the federal new markets tax credit, which is helping to fund these three disparate facilities to serve lower-income families and individuals. These projects, which qualified for NMTCs under the program’s targeted population criteria, were described by panelists at the National Housing & Rehabilitation Association’s recent 2011 Winter New Markets Tax Credit Symposium….
Thom Amdur: New Developments – Crisis Averted! But Another Crisis Looming!
I breathed a deep sigh of relief after the 11th hour compromise between the House Republicans, Senate Democrats, and President Obama narrowly averted the first government shutdown since 1995. A government shutdown would have slowed to a halt many recovering multifamily rental real estate developers….
David Smith: The guru is In – The price of terms
What’s the price? Ask anyone in the LIHTC world how good a deal they made on their last transaction, and the answer always begins with one simple number: the equity price, measured in cents per dollar of LIHTC. It’s the universal cocktail-reception metric, the opening question to industry-expert panelists, the way we keep score and show we’re in the know: What’s the price?....
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