04 Mar · Tue 2014
Art Momjian to Speak on Historic Tax Credits at Duane Morris CLE Program
27 Feb · Thu 2014
New Markets Tax Credit Allocation Award Update from CDFI Fund
25 Feb · Tue 2014
New York Sets Amendment to Action Plan to Distribute $2.1 Billion of Additional Sandy Federal Recovery Funds
New York's Office Of Storm Recovery last week released plans for how to divide the second tranche of billions of dollars from the U.S. Department of Housing and Urban Development Sandy relief program. The almost $2.1 billion will be used for housing, community reconstruction and infrastructure improvements. All of the funds will be issued through the HUD Community Development Block Grant program (CDBG) which is administering $16 billion of the total $60 billion allocated by the Federal government to fund Sandy relief efforts. The initial allotment to New York State was approximately $1.7 billion, while New York City received $1.773 billion in a separate allocation.
This new allotment would be distributed as follows: $1.121 billion would be allotted for housing needs, $441 million for community reconstruction, $430 million for infrastructure and the balance for administration and planning. No funds would be distributed for economic development in this allotment.
The housing distributions will be made to the following programs: New York Rising Housing Program ($435 million), Interim Mortgage and Housing Assistance Program ($57 million), New York Rising Buyout Program ($521 million), New York Rising Rental Buildings Recovery Program ($100 million) and Sandy Housing Assistance Relief Program ($7.5 million). The homebuyer buyout program given originally $156 million in the first allotment will see an increase by over 3 times to a total of $521 million in this second allotment. All of the new community reconstruction funds would go to The New York Rising Community Reconstruction Program.
The plan states that Sandy damaged or destroyed over 157,000 housing units including 35,000 in Nassau County and 10,000 in Suffolk County. According to the Governor’s office, these new funds will be used primarily to help make homeowners whole. Hearings will be held on Long Island in February and March. The plan can be found at stormrecovery.ny.gov.
15 Feb · Sat 2014
Historic Tax Credit Safe Harbor - Part III: Investor's Capital Contributions
Revenue Procedure 2014-12 (the “Rev Proc”) which establishes a safe harbor for structure Federal Historic tax credit transactions provides guidance on the staging of capital contributions by the Historic Tax Credit investor. First, the Rev Proc requires that at least 20% of the tax credit investor’s aggregate capital contribution be contributed before the project is placed in service. In this vein at least 75% of the tax credit investor’s aggregate capital contribution must be fixed at the time of placement in service of the project. The effect of these two requirements of the Rev Proc is to limit the provision in the sponsor’s partnership agreement or master tenant agreement which would adjust the capital required to be contributed by the tax credit investor to 25% of the scheduled investor capital contribution of the tax credit investor. Finally the Rev Proc provides an example to illustrate that the tax credit investor’s expected fixed capital commitment may be conditioned upon the achievement of mutually agreed upon milestones (e.g., receiving National Park Service approvals, leasing the Building to tenants).
14 Feb · Fri 2014
Historic Tax Credit Safe Harbor - Part II: Guarantees
Revenue Procedure 2014—12 (the "Rev Proc") issued by the Internal Revenue Service creates a safe harbor for investors in the Federal Historic Tax Credit. Traditionally the tax credit investor has obtained a guaranty with respect to the benefit of the Federal Historic tax credit from the sponsor of the transaction. However, the Rev Proc prohibits funded guarantees and certain "impermissible guarantees. "Impermissible" guarantees are defined as guarantees: (1) to insure the Investor’s ability to claim the historic tax credit, or the repayment of any portion of the Investor’s contribution due to inability to claim historic tax credit in the event the Internal Revenue Service (the "Service") Service challenges all or a portion of the transactional structure of the Partnership; (2) that the Investor will receive Partnership distributions or (3) to pay the Investor’s costs or indemnify the Investor for the Investor’s costs if the Service challenges the Investor’s claim of the historic tax credit. The Rev Proc defines permitted guarantees as guarantees: (1) for the performance of any acts necessary to claim the historic tax credit; (2) for the avoidance of any act (or omissions) that would cause the Partnership to fail to qualify for the historic tax credits or that would result in a recapture of historic tax credit; and, (3) that are not described as impermissible guarantees . The Rev Proc also provides the following as examples of unfunded guarantees permitted: completion guarantees, operating deficit guarantees, environmental indemnities, and financial covenants.
13 Feb · Thu 2014
The Historic Tax Credit Safe Harbor - Part I
Revenue Procedure 2014—12 (the “Rev Proc”) issued by the Internal Revenue Service creates a safe harbor for investors in the Federal Historic Tax Credit. It is anticipated that in the aftermath of the Rev Proc changes will be made in the underwriting and structuring of Federal Historic Tax Credit transactions. The Rev Proc requires that a tax credit investor receive reasonably anticipated value, exclusive of tax benefits, as a result of its investment in developer partnership or master tenant. The issue of value may be satisfied by the traditional preferential return although a preferential return cannot be guaranteed and must be dependent upon the success of the project. With respect to the back end, the Rev. Proc prohibits an option to the developer to purchase the Investor’s interest but does permit the traditional “put” right of the tax credit investor to sell its interest to the sponsor as long as the sale is for not more than the fair market of the value of the investor’s interest and the tax credit investor does not abandon its interest. Accordingly it appears that the traditional preferred return to the tax credit investor and the investor “put” right are preserved by the Rev. Proc provided that the preferred return is not guaranteed and the economic interest of the tax credit investor is not reduced by “unreasonable” fees and expenses which would distort the economic benefit to the tax credit investor.
10 Feb · Mon 2014
New Bill Would Increase and Make Permanent the New Markets Tax Credit Program
11 Jan · Sat 2014
Manufacturing Communities Investment Act would Extend and Increase NMTC Program
In response to the decline in manufacturing jobs in certain parts of the Country, the Manufacturing Communities Investment Act was introduced to the Senate. This Bill which would extend the Federal new markets tax credit (NMTC) Program through 2016 with an increase in the annual NMTC allocation from $3.5 billion to $5 billion in calendar years 2014, 2015 and 2016. In addition the Bill would authorize an additional $1 billion in NMTC allocation for 2014, 2015, and 2016 which would be allocated by the CDFI Fund to CDEs whose mission is investments in communities affected by major manufacturing job losses. The Bill has been referred to the Senate Finance Committee.
31 Dec · Tue 2013
IRS Publishes Safe Harbor for Historic Tax Credit Investors
16 Dec · Mon 2013
HUD Announces Additional $1.5 Billion in Sandy CDBG Funds
12 Dec · Thu 2013
Duane Morris Closes NMTC Transaction for Community First Fund
CDFI Fund Launches New Information Mapping System
The Community Development Financial Institutions Fund (CDFI Fund) launched the next version of its CDFI Information Mapping System (CIMS3). The web-based tool allows organizations interested in applying for certification as a Community Development Financial Institution (CDFI) or Community Development Entity (CDE), or in applying to one of the CDFI Fund’s award programs, to visually plot their eligible service areas and investments. CIMS3 is intended to improve the past mapping capabilities the CDFI Fund offered.It also for the first time allows the general public to access eligibility data for each of the CDFI Fund’s programs. CIMS3 will also allow prospective and certified CDFIs and CDEs enhanced capacities to identify and assess target markets, to quickly and accurately determine the eligibility of specific sites for possible investments, and to easily create maps and geographic data analyses.
07 Dec · Sat 2013
Duane Morris Closes $36,000,000 Acquisition and Rehabilitation Transaction
05 Dec · Thu 2013
Art Momjian to Speak at NMTC Conference
12 Nov · Tue 2013
Duane Morris Project Featured on Cover of Novogradac Journal of Tax Credits
The Novogradac Journal of Tax Credits featured on the cover of the September issue the historic rehabilitation of the Palmer Seminary in Wynnewood, Pennsylvania. Art Momjian, a partner and Chair of the Affordable Housing and Community Development practice group of Duane Morris LLP, represented the developer Cross Properties in the structuring of the historic tax credit transaction. The Palmer Seminary building was originally opened in 1919 as the Green Hill Farms and Apartments. Twenty years later theology students moved into the building when it became the Eastern Baptist Theology Seminary. After the historic renovation the building will consist of 112 rental apartments and 14,000 square feet of medical office space.