Twinning Historic Tax Credits and New Markets Tax Credits Charlie Werhane Vice Chairman/COO...
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Transcript of Twinning Historic Tax Credits and New Markets Tax Credits Charlie Werhane Vice Chairman/COO...
Twinning Historic Tax Credits and New Markets Tax Credits
Charlie Werhane
Vice Chairman/COO
Enterprise Community Investment, Inc.
November 8, 2007
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Enterprise NMTC Portfolio Overview
$515 million in allocations
26 NMTC investments closed
12 projects include the twinning of HTC and NMTC:
Broad product mix
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Enterprise Portfolio
Closed HTC/NMTC Transactions
47%HTC/NMTC
53%Non
HTC/NMTC
340 mm
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Old Post Office – St. Louis, MO Fashion Square – St. Louis, MO Drury Hotel – San Antonio, TX Oak Street School – Buffalo, NY Court Square Center – Memphis, TN
Project Impact
Examples
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Court Square Center
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Court Square Center
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Sources and Uses:
($ in millions)
Sources: Uses:
A Loan (Perm. Loan) $8 Site Acquisition $1 B Loan (Sec. 108 Loan) $8.5 Hard Costs $31.7 C Loan (BEDI Loan) $2 Soft Costs
$6.8 D Loan $.2 Other $11.5 HTC Equity $6.3 NMTC Equity $11.3 Insurance proceeds $9.1 Other $5.6
Total: $51 Total: $51
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NMTC Equity generated by twinning HTCs and NMTCs
Total Federal HTC Equity (based off of QREs) is $6.3MM *
Total Loans and Equity infused into project generating NMTC:
A Loan (Perm. Loan) $8MM B Loan (Sec. 108 Loan) $8.5MM C Loan (BEDI Loan) $2MM D Loan $.2MM Federal HTC Equity $6.3MM *
NMTC Equity boost to project on HTC approx. $2MM
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Complexity
ESIC has implemented the organizational ESIC has implemented the organizational structure to allow investors to take full structure to allow investors to take full advantage of the New Markets Tax Credit.advantage of the New Markets Tax Credit.
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Example of a Master Lease Structure - 1
Landlord
Investment Fund
$ QEI
Master Tenant$ Equity
$
QLICI
Loans
$ QLICI
Equity
EnterpriseCDE
HTCs
HTCs
HTCs, NMTC,
Distributions
Debt Service
EnterpriseAllocatee
Allocation
Subtenants
Developer
Equity/Property
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Loan A= EB&T Leverage Loan State HTC Loan Loan B= Crown Village Loan, plus, State HTC Loan from Managing Member Loan C= Portion of NMTC equity to balance QEI, less CDE fees
$2,629,842 Loan D= HTC equity plus balance of NMTC, less CDE fees and equity to MTCredits
NMTC Equity 100.00%
$5,371,275 Federal HTCsFederal HTC Equity NMTCs
$3,080,170 17,500,000 QEI $1,655,000
Loan
$470,000 Loan
LIHTC & NMTC Lease Proceeds $4,763,713
$12,500,000
QEI
Federal HTCs
6,471,613$5,000,000
QEI
$725,000
Capital
$6,001,613 CDE FEE
$937,500
$1,500,000 Equity
$1,707,900 $100,000
Contributed CDE FEE
Property
$235,000 $1,930,000
Ground Lease Debt Service
6,001,613 Rent
Contributed Cash Flow/Profit/Losses
$2,765,000 Property Loan C Loan B Loan A Loan D Equity Federal HTCs
$1,930,000 $2,513,945 $7,393,555 $1,655,000 $2,300,000 $2,600,000$2,765,000
2,212,000 at closing Equity:
553,000 at completion $1,707,900 Combined
Total Equity Equity: $2,600,000
$3,637,900 Cash Flow/Profit/Losses
32740003274000 Rent
State HTC Loan Cash Flow/Profit/Losses 40-year lease$2,629,842
State HTC Certificate Federal HTCs: 100%
35-year lease
SHTC Certificate RentEnterprise CDE Loan A $1,655,000
$2,896,346 Enterprise CDE Loan B 7,393,555Purchase of Credits Development Services Enterprise CDE Loan C 2,513,945
Dev. Fees MBS CDE Loan D 2,300,000$3,541,613 2,765,000 MBS CDE Equity 2,600,000
Capital on behalf of Contributed Property 1,930,000
ONSLRG & PDC I Gen. Ptnr. Equity 1,707,900State HTC Investor 100
$20,100,500Uses $20,100,500Gap (0)
Rent
$776,613Development Fees
Dev. Fees$2,765,000
Investment FundMBS-UI Investment Fund III, LLC
$17,500,000Non-Managing Member: 100%
Non-Member Manager
Federal HTC & NMTC Investor
US Bank
Leverage LenderEnterprise Bank & Trust
Enterprise CDEESIC New Markets Partners XVI, LP
$12,500,000Investment Fund: 99.99%
CDE Sponsor: .01%
McCormack Baron Salazar CDEMBS-UI Sub-CDE III, LLC
$5,000,000Investment Fund: 99.99%
CDE Sponsor: .01%
Crown Village Associates, LLC
Non-Profit Land Owner $6,001,613 Capital and
$470,000 Up-Front Lease Proceeds
RHCDA Bridge Loan
CDBGMoney
RHCDA ProgramSources
Bridge Loan
QALICBFourteenth Street Mall Commercial, L.P.
NMTC PartnershipMaster Tenant LLC : 10%
Managing Member (Affiliate) : 89.99%State HTC Investor: .01%
Master TenantMaster Tenant, LLC
100% McCormack BaronState HTC Limited Partner (of QALICB)Fourteenth Street Mall Commercial II, LLC
PDC XXVIII, Managing Member .01%Loss Partner, 99.99%
Taxable Subsidiary(Loss Partner Fees of $266,504)
Proceeds of LIHTC and
NMTC Lease Pmts.
CDE Sponsor CDE Sponsor
State HTC PurchaserUS Bank
Old North St. Louis Restoration Group (ONSLRG)
Tax Exempt Neighborh'd Ptnr. Member, Crown Village Assoc.
LLC
St. Louis Public Development Corp. (PDC I)
RHCDA Tax-Exempt AffiliateManaging Member, Crown Village
Assoc. LLC$6,001,613
DeveloperCrown Village Development,
LLC(LIHTC and NMTC
Developer)
LIPartnershipPDC I (Mng.
Member)
ONSRLG (Member)
Occupant
Sub-TenantFor-Profit
General Partner ofQALICB
(For-Profit Subsidiary of Crown Village Associates, LLC)
State HTC Bridge LenderEnterprise Bank & Trust
$2,629,842 Bridge Loan
$2,629,842 Repyament
NMTCs
Example of a Master Lease Structure - 2
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THANK YOU