New to LIHTC deals and trying to figure out if our structure works. It is a 4% LIHTC conversion deal in the Northeast. We have a JV partner who has done several LIHTC deals but recently got burned on another deal by the 10-year rule, which reduced their expected LIHTC proceeds.
We acquired the building 2 years ago and will be selling the property into a new 50/50 JV with the development partner. From what I'm told we can't count the acquisition cost in our basis unless we qualify for one of the waivers under the 10-year rule.
Our proforma has DOH funds coming into the deal along with additional funding from a state housing agency. Someone mentioned there's an exception to the 10-year rule if you have federal or state housing agency financing involved. Is that right? And if so, does a DOH loan actually qualify?
Has anyone dealt with this before? Would really appreciate hearing from people who've closed deals in similar situations.
75% sure HUD 221d4 and 220 loans that are assumed from the seller are exempt. There was something with section 8 too but could be wrong. My hunch is that DOH loans would not qualify.
Freddie Mac Bond Credit Enhancements with HUD Risk Share 542(c) risk share
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