Tax Credit Advisor Article Archives

Retrofitting affordable multifamily rental housing properties to make them more energy efficient is critically important for building owners and managers. As shown in the graph below, energy consumption is the largest or second-largest category of operating expenses in these kinds of properties.

Since the LIHTC program was made permanent in the early 1990s – ancient history for the young professionals in our industry today – a market study has been required for every proposed project receiving an allocation of housing tax credits. The market study provides an opinion on whether the proposed project is feasible, based on an extensive analysis of the characteristics of the property and the market, location, competing properties, and other factors.

With the rolling out of any new program, and especially demonstration programs, there are lessons to be learned, and HUD has been impressively nimble as this program has transitioned from idea to implementation.

The Rainier Beach High School Vikings won the state boys’ basketball championship for the third straight year and extended their winning streak to 34 games. They were ranked eighth in the U.S. and played in a prestigious high school tournament in April in New York City, falling just short in their bid for the national title.

Federal new markets tax credits are helping to finance the construction of a new health clinic in Cleveland, Ohio. The two-story, 30,000-square-foot facility, located in the city’s Central neighborhood, will be owned and operated by Care Alliance, a federally qualified health center that serves the homeless, public housing residents, and other underserved individuals.

Market studies for proposed low-income housing tax credit projects have become more sophisticated and refined in recent years – and more necessary with the ever-growing LIHTC inventory.

The Affordable Housing Tax Credit Coalition recently announced winners of the 20th Annual Charles L. Edson Tax Credit Excellence Awards. The awards recognize outstanding affordable rental housing developments across the nation funded with federal low-income housing tax credits.

In nearly four decades in this business, I have never believed in the logic structure underlying traditional market studies, because they have their causality backwards. And (confession time) I have never used one to make a decision, because a much better means of testing the market is readily available.

Boston Capital finished closing a $193 million national multi-investor fund in late March that has a projected after-tax IRR to investors of 7.25%, said Jeff Goldstein. The company is on the street with a new $150 million national fund (7% IRR) that was 50% specified in properties as of early April.

Do you want to be an affordable housing investment banker, a titan of structured finance making a market in low-income housing tax credits? You are ready to spend hours upon end laboriously gathering minute financial information on a proposed property; analyzing its risks in painstaking detail; performing two-dimensional scenario sensitivity analysis; and then surfacing and innovatively managing transaction, operational, and counterparty risks.

In Hartford, Conn., nicknamed the insurance capital of the world, work has begun on redeveloping a vacant, iconic 26-story office tower in the city’s central business district into housing, retail outlets, and parking.

The amount of investor equity for new stand-alone historic rehabilitation tax credit deals still hasn’t rebounded to the level of a few years ago before the Historic Boardwalk Hall decision. Industry officials reported that investors, developers, and tax attorneys are still trying to reach agreement on certain structuring aspects for new deals to be comfortable they will fall under the safe harbor outlined in recent IRS Revenue Procedure 2014-12.