To my understanding, tax credit investors buy tax credits at a reduction of face value in exchange for contributing to equity in the deal. However every ownership structure I've seen has this investor being some type of limited partner with 99% ownership so that they can get 99% of the tax credits.
My question is, this seems like kind of a raw deal for the developer. The investor is getting tax credits, and 99% of cash flow for 5 years until the developer can be buy out them out? I know the developer gets a developer fee/asset management fee, but how large of a % of free cash flow can that reasonably be? Am I missing something?
