Midwest Lenders Association Conference Federal and State Tax Credit Programs October 13, 2015.
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Midwest Lenders Association Conference Federal and State Tax Credit Programs October 13, 2015
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Transcript of Midwest Lenders Association Conference Federal and State Tax Credit Programs October 13, 2015.
Midwest Lenders Association Conference
Federal and State Tax Credit Programs
October 13, 2015
2
Federal and State Tax Credit Programs
Low-income housing tax credits
Historic rehabilitation tax credits
New markets tax credits
3
Equity market is robust – equity is in excess of available credits
Type of investors Financial insititutions
Syndicators Financial institutions
Insurance companies
Other widely-held C corporations
CRA vs. Non-CRA market
Low-Income Housing Tax Credits
4
Low-Income Housing Tax Credits
First Mortgage Debt (Lender)
Sample Project, LLC(Landlord)
Managing Member .01% Federal Investor
99.99%
Debt Repayment
Debt $0
Equity$0
Equity$0
5
IRS Safe Harbor (Rev. Proc. 2014-12)
Type of investors Financial insititutions
Other widely-held C corporations
Syndicators Financial institutions
Other widely-held C corporations
Historic Rehabilitation Tax Credits
6
Tax Structures Single tier structure
Master lease structure
IRC Section 50(D) income
Historic Rehabilitation Tax Credits
7
Historic Rehabilitation Tax Credits
Sample Project, LLC(Landlord)
First Mortgage Debt (Lender)
Managing Member 1% Federal Investor
99%
Debt Repayment
Debt $0
Equity$0
Equity$0
8
Historic Rehabilitation Tax Credits
Sample Project, LLC(Landlord)
Sample Project Master Tenant, LLC
(Master Tenant)1%
First Mortgage Debt (Lender)
Federal LIHTC Member97.99%
Managing Member .01%
Managing Member .01%
Federal Historic Investor99.99%
State Historic entity 1%
Debt Repayment
Debt $0
Equity$0
Equity$0
Equity$0
9
Statutorily expired after 2014 – part of “extenders package” currently in Congress
Leverage lender concept
Complex structure
Expensive capital
Non-profits are the best sponsors/owners
New Markets Tax Credits
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New Markets Tax Credits
Investment Fund(99.99%)
Federal NewMarkets Investor(100%)
ABC Bank Leveraged Loan
CDE Managing Member
.01%
ABC Project (Fee owner - Landlord)(QALICB)
XYZ Sub-CDE(100%)
XYZMM, LLC(99%)
ABCMember
(1%)
Debt $8,400,000
Debt Services
Debt $4,488,145
Equity $2,788,500
Debt Services
Put Option $1,000
NMTC’s $4,290,000
Sub-allocatee Fee $188,500
CDE Fees$471,500
QEI $11,000,000
Debt – A Piece $8,400,000
Debt – B Piece $2,128,500
Debt Services
Equity $100
Equity $192,659
