I am curious to see if any LIHTC developers (or syndicators) have been able to make a 4% LIHTC development work now that the credit is fixed, and if you can show an example of your sources & uses (high-level is fine, doesn't need to be all that specific). Are there certain areas where a 4% deal is more likely to work?
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When were they not working?
Fair. In a lot of markets they were very challenging when they were floating for new development.
States with a state credit match are easier due to the increased level of tax credit equity. However many of these states are inundated w applications and have no idea what to do w the volume. Exploring tax abatements, getting aggressive on rent increases, FHA debt..pricing is so high the deal almost needs to be in a QCT nowadays
QCT/DDA boost, CRA market with favorable LIHTC pricing, and private placement on bonds to max proceeds.
I work for a 4% developer in SF as well.. Lack of bond cap in CA has been holding us back from resyndicating a bunch of our 15+ year lihtc deals. A transition from the 50% test to the 25% test would create a huge windfall of bond cap and the state will hopefully start reprioritizing Tax Credit Equity allocations to legacy acq/rehab projects vs. new construction deals. There are some super creative sources and uses structures floating around now either using private bonds or taking public subsidies.
4% deals are MORE likely to work with the credit fix, because it generates more tax credit equity than when the rate was floating around 3.20-3.30%.
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