LOW INCOME HOUSING TAX CREDITS November 2019 Benjamin
LOW INCOME HOUSING TAX CREDITS November 2019 Benjamin Shockey Raymond James Tax Credit Funds
LOW INCOME HOUSING TAX CREDITS I. Why Low Income Housing Tax Credits? II. Keys to Success III. The Role of the Syndicator
HOUSING NEED VS. NAHASDA FUNDING Housing Need Compared to NAHASDA Funding compared to baseline 200% 190% 180% 170% 160% 150% NAHASDA w/impact of inflation Annual NAHASDA vs 2002 Housing Shortage vs 2002 Overcrowding vs 2002 140% 130% 120% 110% 100% 90% 80% 70% 2002 2004 2006 2008 Calendar Year 2010 2012 2014 2016
WHY LOW INCOME HOUSING TAX CREDITS? • Housing Needs for Specific Groups or Income Levels • Equity financing for development or rehabilitation of affordable housing • Can include Community Buildings used by qualified housing tenants • May be used to leverage other funding sources to meet growing housing needs • More units built/rehabilitated with less TDHE funding • Potential Source of Employment • Housing is managed by Tribally Designated Housing Entity • May be constructed by TDHE or third-party contractor
WHAT IS A TAX CREDIT? • Dollar for dollar reduction in tax liability used by investors per Section 42 of IRS Code • Investor provides capital / equity in exchange for tax credits • Equity provided to develop project • Tax Credits received over 10 -year period • Not a loan – No debt-service payments
LEVERAGING EXAMPLE Available TDHE Capital Tax Credit Equity Total Available Capital Avg Cost Per Unit Number of Units Built/Rehabbed Without Tax Credits With Tax Credits $1, 000, 000 $0 $4, 000 $1, 000 $5, 000 $200, 000 5 25 • Assumes $1 MM in TDHE Capital Available • Assumes RJTCF historic average of 80% of cost paid for with Investor Partner Equity • Assumes average cost per unit of $200, 000
KEYS TO SUCCESS I. What are my needs? II. What is my capacity? III. Project Support
WHAT ARE MY NEEDS? • Housing Waiting List (overcrowding) • Rehabilitation of existing housing stock vs. New Construction • Families, Seniors, Veterans, Homelessness, Special Needs, Income Ranges? • Location (Trust Land vs. Fee Land) • Employment • Amenities
WHAT IS MY CAPACITY? • Human Resources • State Deadlines, Training, Construction Schedule (weather) • Financial Capacity • Funding programs, grants, NAHASDA, ICDBG • Infrastructure • Self-Performance vs. third-party contractor • Annual Audit
PROJECT SUPPORT • Tribal Council • Changes in Elected Leadership over time • Housing Board • Housing Staff • Training Opportunities / Technical Assistance • Meeting Community Needs
TERMS TO KNOW • Letter of Intent and Partnership Agreement • Price per Credit • Guarantees: • • Completion, Operating Deficit, Tax Credit, Title Credit Delivery and Equity Delivery Adjusters Development Fee Leases Bureau of Indian Affairs Environmental Considerations (ESA vs. EA)
OBTAINING TAX CREDITS • Tax Credit Application • Market Study • Legal Documents Required under QAP • Demonstration of Need, Capacity, Commitment, etc. • Project Defined • Projects awarded credits based on scoring under Qualified Allocation Plan • Competitive Scoring Process • Tax Credit Allocation
ROLE OF THE SYNDICATOR I. Source of Equity II. Investor Partner III. Asset Management Support
EQUITY INVESTED BY STATE $527 MM Equity Investments by State $4, 136, 292. 08 $65, 494, 048. 26 $65, 724, 040. 25 $17, 518, 723. 39 $1, 462, 847. 76 $3, 554, 847. 06 $21, 927, 346. 86 $5, 123, 747. 93 $78, 930, 888. 02 $172 MM Invested in GLIHA States $106, 078, 239. 11 $5, 967, 937. 63 $17, 309, 822. 78 $10, 670, 802. 97 $46, 940, 199. 58 $28, 519, 157. 73 $47, 831, 212. 00 AZ CO ID KS MA ME MN MT ND NM OK SD TX WA WI WY
UNITS BY STATE 4, 004 Units By State 60 93 30 39 42 28 453 434 538 60 335 260 467 95 AZ CO ID KS 1, 251 units in GLIHA States 817 253 MA ME MN MT ND NM OK SD TX WA WI WY
PROJECT FINANCING STRUCTURE • TDHE Debt • TDHE Equity – Managing Partner, but 0. 01% interest • Investor Partner Equity • = annual credits x 10 x Price Per Credit x 99. 99% • TDHE also receives Development Fee
TAX CREDIT ALLOCATION? TIME TO SELECT AN INVESTOR PARTNER!
WHAT SHOULD I EXPECT FROM MY INVESTOR PARTNER? SERVICE FIRST SERVICE • Raymond James is a full-service LIHTC syndicator, involved from allocation through Year 15 disposition o Sourcing and acquisition o Underwriting o Asset management EXPERIENCE • Raymond James has 3, 000+ units under management with Tribally Designated Housing Entities • Asset Management is fully sustainable o Able to meet all operating commitments for the life of our current funds STABILITY • Raymond James Tax Credit Funds, Inc. is a wholly-owned subsidiary of Raymond James Financial • Significant capital backing from our parent • Long-term, strategic commitment to LIHTC and investments with TDHEs
WHAT SHOULD I EXPECT FROM MY INVESTOR PARTNER? EXPERTISE EXPERIENCE WITH TDHES • RJTCF has Sponsored more than 130 Low Income Housing Tax Credit (“LIHTC”) projects with Tribally Designated Housing Entities since 1999 • Invested in development of more than 3, 800 units with Tribally Designated Housing Entities in 16 states • 54 TDHEs, 27 repeat TDHEs SYNDICATION HIGHLIGHTS • $500 MM of Equity Raised for Investment in LIHTC projects with TDHEs • Ranked #1 among all firms in new syndicated equity volume 2013 through 20181 • Ranked #1 among all syndicators in transactions closed 2014 through 20181 INDUSTRY LEADERSHIP • Ranked #1 among all firms in investment with Tribally Designated Housing Entities • Forged path in LIHTC industry for investments with TDHEs • Conveyed more than 600 units to TDHEs with plans to convey another 1, 100 units over next five years
PATH TO CLOSING • • Due Diligence Checklist Title/Survey (BIA) and Leases Plans & Specs Financials / Insurance Contracts (GC, Architect, Engineering) Environmental Partnership Agreement and Guarantees Closing Docs (Loans, Rental Assistance, Mgmt Agreement, Compliance Agreements, Legal Opinions, etc. ) • Tribal and Housing Board Resolutions
CONSTRUCTION • General Contractor, Subcontractors, Construction Management • Monthly Draws & Change Orders • • Contingency Architectural Inspections State Agency Reporting Communication with Accountant Placed-In-Service Requirements Certificates of Occupancy Lease-Up and Tenant Qualification 8609 s
PROJECT OPERATION & ASSET MANAGEMENT SUPPORT • Managing Partner = Decision Maker, Responsible for day-to-day Operation • • • 15 -year Initial Compliance Period Annual State Agency Compliance Visits Annual Investor Partner Compliance Visits Annual Reporting: Tax Returns and Audits Maintenance of Units, Inspections, Compliance, Budgets
PROJECTS UNDER MANAGEMENT Units Under Management 1176 1974 646 Units Under Management Units Conveyed Units to be Conveyed in Next Five Years
PROJECT CLOSEOUT • Year 15 – Investor Partner exits the Partnership • 15 -year Extended Use Period • Homeownership? • Rehabilitation / Re-syndication?
RAYMOND JAMES EXPERIENCE PROVEN TAX CREDIT PARTNERS. TRUSTED PARTNER. STRENGTH AND STABILITY. FOCUSED EXPERTISE. TAX CREDIT FUNDS, INC.
KEY PERSONNEL Steve Kropf is President and Chief Executive Officer of Raymond James Tax Credit Funds (RJTCF). He has overall responsibility for the company, including oversight of originations, acquisitions, underwriting, investor reporting, asset management and dispositions. Steve is a member of the RJTCF Investment Committee, which is responsible for reviewing and approving each partnership. Prior to joining Raymond James in 2000, he was a senior manager within the financial advisory services practice of Pricewaterhouse. Coopers. Steve received a Bachelor's degree in Engineering, a Master’s in Engineering and an MBA from the University of Florida. James Horvick is Vice President and Director of Originations for Raymond James Tax Credit Funds and is a member of RJTCF’s investment committee. He is responsible for the overall infrastructure of the originations team, and directly oversees three regions (Coastal, Southeast, Midwest), and leads in the development of regional equity placement strategies. James served on the City of Tampa’s Affordable Housing Advisory Committee. Prior to joining RJTCF in 2002, he developed and delivered specialized training programs for Raymond James & Associates. James received an MBA with honors from the University of Florida and a BA from Concordia College. Benjamin Shockey is Associate Director of Acquisitions for Raymond James Tax Credit Funds and leads RJTCF efforts in partnering with Tribally Designated Housing Entities. Benjamin has successfully managed closings for more than 50 LIHTC transactions since 2014, and received an MBA from the University of South Florida St. Petersburg in 2013 while working as an acquisitions analyst with RJTCF. Prior to joining RJTCF in 2010, Benjamin played three seasons of professional baseball following completion of his BA at Warner Southern College in 2008. Brian Lynch is Vice President, Asset Management for Raymond James Tax Credit Funds. Brian is a member of RJTCF's investment committee, and is responsible for all asset management functions related to the properties in its portfolio. Brian is a veteran of the affordable housing industry, with experience in asset management, tax credit compliance, work-outs, and property operations throughout the United States. Prior to joining Raymond James, he served as manager of loan servicing at The Community Preservation Corporation, an affordable housing lender in New York. Brian earned his BA from Fairfield University and his MBA from Fordham University.
TOM AND MARY JAMES ART COLLECTION https: //thejamesmuseum. org/permanent-collection/
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