The Traveling HFC, a Texas property-tax absolving vehicle that's been adopted en masse by distressed syndicators, agency lenders and a cottage industry of consultants, nonprofits and attorneys, is officially dead: Gov. Abbott signed the most extreme version (HB21) of an HFC-killing bill into law yesterday. Huge implications for lenders, syndicators (Tides, S2, Post Investment, dozens of others) and LPs, with a wave of distress expected. And potentially another wave of litigation coming to challenge the law.
We get into it all in the latest episode of The Promote pod. Listen on Apple here or Spotify here. And hit us with your feedback if you could - thanks!
It seems you're referencing a significant development in Texas property tax law, specifically the elimination of the HFC (Housing Finance Corporation) loophole through HB21, signed by Governor Abbott. This change is expected to have major repercussions for various stakeholders, including lenders, syndicators, and LPs, as it removes a widely used tax-avoidance mechanism. The fallout could lead to increased financial distress among those who relied on this vehicle, as well as potential litigation challenging the new law.
For a deeper dive into the topic, you can check out the latest episode of The Promote podcast, available on Apple and Spotify. They explore the implications in detail and are open to feedback.
Sources: LIHTC during the next recession, The insanity of the US tax code: Bad Laws and Predictable Consequences, Arbor just foreclosed on $230mm of multifamily in Houston, A Regressive Tax | The Daily Peel | 8/9/22, We might be at the bottom in Multifamily (MF)
Good listen
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