LIHTC Ground-Up Development Model

holeymoley:

There are all sorts of nuances to tax credit development deals:

1. A surprising amount of random line-items don't qualify for basis.
2. Caps on Developer Fee
3. Caps on Tax credits (for 9%s)
4. Needs to cash collateralize bonds (for 4%s)
5. Syndication fees differ radically.
6. Timing of Tax credit equity coming in
7. Bridging method of tax credit equity (usually a loan from the credit buyer)
8. How much fee needs to be deferred
9. Soft money amounts, terms, etc
10. Random fees and the order of paying those fees (soft money loans, deferred fee, random investor fees, AM fees, etc)

All this goes to say, you're not going to get a one size fits all model, but ou can certainly develop a model for a specific state that is dynamic. Also, people aren't going to share a model with you because they've probably curated it for a specific state, so it won't be very generic and therefore more of an IP issue.

1. In your development budget section add a column for percent basis eligible. If not eligible you can quickly go and zero out specific items for ease of adjusting basis calculations.

2. Always calculate net fee and deferred fee. Have a set of "check" inputs that will let you know if your dynamic calculations exceed the limits you have input.

3. Same as fee

4. Not much help here

5. Add a line item for syndication expenses to your budget. They won't be basis eligible.

6. In your pay in have these tied to event driven dates (% completion, Perm loan, 8609) then build your construction period flow of funds with the ability to match to those dates.

7. Same as 6, just account for timing and interest in your FoF

8. Use the check method to make sure your net fee is ok. Input the deferred fee as a loan with the rest of your sources.

9. Generally treated as loans.

10. CF waterfalls are generally a PITA but tied to dollar amounts rather than %s so its pretty easy to slap one together for a new deal.