Cherrytree Group LLC Blog

Previous posts have discussed the differences between a tax deduction and a tax credit.  Transferability is the key distinction between the two.  While we all have deductions that we can take against our gross income, these deductions are personal to each individual.  

A tax credit is a direct credit against bottom line taxable income, and may be transferable to other taxpayers. There are restrictions to transferability based upon the type of tax credit, but in general, the portability of a tax credit has created a marketplace for the sale and transfer of many different types of tax credits. This is a very useful source of finance, equity, or reimbursement, especially in this economy.  

At The Cherrytree Group, we advise many clients on the use, transfer, and sale of their tax credits, but in developing a market for tax credits, it is important that clients consult with us prior to conducting a project, rather than in the latter stages of a transaction.  We can assist with developing the potential tax credit equity into a proposed budget or development pro-forma, which can lead to more control over financing costs.

Cherrytree has grown into a financial services company that has its own capital, credit lines and equity facilities, as well as a warehouse of tax credit buyers that include banks, insurance companies, Fortune 500 companies, multinational corporations, and high net-worth individuals.  We have the capacity and capability to purchase your tax credits for our own account, or broker a sale of the tax credit to one of our buyers.  For more information on this process, contact The Cherrytree Group.

...by Warren Kirshenbaum


There are numerous cities across the United States which can be considered "cleantech capitals." With a large array of renewable resources, a dedication by businesses and homeowners to become more energy efficient, and a large hub for research and development, a lot can be accomplished when it comes to creating new, efficient and sustainable clean technologies. There are many factors that make up a "capital for cleantech," and although there are more than ten cities around the nation that are involved in clean technologies, here are six of the top cities.

1) Boston, Massachusetts. Boston is said to enjoy some of the most supportive policies in the United States for energy efficiency and renewable energy. After California, Boston is second in clean technology venture capital investments. With an environment that is ripe for cleantech startups, numerous companies are moving their business to Boston. The MIT Clean Energy Prize is a venture and innovation creation competition that encourages clean energy innovation. Its objective is to provide educational opportunities and supply incentives to ventures demonstrating the clean energy affordability. As well, the development of MIT's cleantech incubator will provide Boston with more access to cleantech flow, increasing the demands for all future building to be constructed in accordance to LEED standards set up by the U.S. Green Building Council.

2) San Jose, California. San Jose, part of California's Silicon Valley, has been very productive in clean technologies. The city has expanded a number of clean technology investments and because of the research and development institutions in the area, many cleantech companies are coming to make their home in San Jose. San Jose's, "Long-time leadership in engineering know-how, combined with semi-conductor, nanotechnology and optics R&D gives it a leg up in renewable energy development, particularly in solar energy applications." San Jose is also home to the Environmental Business Cluster, a non-profit technology commercialization center assisting startup cleantech companies developing goods and services to positively impact the environment.

3) Austin, Texas. Austin has long been Texas' hub for solar, wind, geothermal, and biomass power, as well as fuel cell technologies. Its commitment to the environment and sustainability has made it not only a national cleantech player, but a global one as well. Austin is home to some of the largest cleantech companies on a global level. A large research and development hub, the University of Texas at Austin has created several research expenditures to elevate research into energy efficiency and renewable energy. This includes a project by the College of Natural Sciences to create biofuel from blue-green algae and hybrid-electric automobile programs developed by The Center for Electromechanics.

4) San Francisco, California. California is one of the top cleantech states in the United States and it is cities like San Francisco that makes it happen. Currently, San Francisco is well on its way to becoming the first city to be completely run by renewable energy by the year 2020. With projects like Sunset Reservoir Solar Project, which is the largest municipal solar facility in the state, and a new $250,000 grant to increase renewable energy capabilities.
 
5) Seattle, Washington. Seattle has been leaving its mark in cleantech society by increasing the need for green standards. The Green Building Sustainable Communities Program, for example, creates city projects that meet sustainable outcomes. Tax breaks and loans are provided to businesses and residences that utilize green practices. Seattle has been a leader in using their garbage to get electricity. They have invested into electricity from garbage landfills.
 
6) Chicago, Illinois. Over 20 percent of total power in Chicago is coming from renewable sources. Due to the increase in the need for renewable energy and energy efficiency, Chicago has been able to create numerous job opportunities while, at the same time, increasing solar power and saving on CO2 emissions. Chicago is also becoming one of the major investment locations for international businesses. Chicago also has a number of green initiatives, including the Chicago Green Office Challenge.

Kirshenbaum Law and Cherrytree Group LLC can help you structure your tax credit transaction. Let us guide you through the process of applying for and securing renewable energy tax credits. These transactions typically require a lawyer, a consultant, and a syndicator, and Cherrytree Group and Kirshenbaum law can act in all three capacities, saving you time and money on your transaction.

The original article was written by Shawn Lesser, and can be seen at http://www.reuters.com/article/2011/03 /28/idUS317857292020110328

The U.S. Treasury Department has awarded Pittsburgh's Urban Redevelopment Authority $35 million in tax credits to stimulate investment in low-income communities.

The URA was one of 99 applicants to receive the New Market Tax Credits; more than 250 government entities, nonprofits and other groups applied.

The tax credits will go to investors in "Community Development Entities," groups formed to undertake projects in low-income neighborhoods. The cedits are designed to draw private investment into those communities.

"This is great news for Pittsburgh," Mayor Luke Ravenstahl said in a statement. "This award will leverage millions of dollars of investment into businesses and real estate projects to create jobs and promote growth in our neighborhoods."

U.S. Sen. Bob Casey, D-Pa., and Rep. Mike Doyle, D-Forest Hills, supported the URA's application.

By Joe Smydo, Pittsburgh Post-Gazette

State Auditor Suzanne Bump intends to review public subsidies for Evergreen Solar, the energy company that recently announced plans to shutter its Devens plant and move more 800 jobs elsewhere despite receiving millions of dollars in public funds, as part of a broader review of the state’s entire system of tax incentives.

With the Patrick administration saying it could recoup $13 million of the $31 million the state invested in Evergreen Solar, the News Service asked Bump if she was considering an examination of the public subsidies in the company.

Bump’s press secretary Christopher Thompson responded with a statement noting that before she took office, Bump had described reviewing the state’s broad system of tax incentives as a priority.

“She has developed an internal team and a strategy to evaluate these investments with a focus on accountability and tax payer [sic] benefit,” Thompson said. “The Auditor’s review will take a broad look at many different tax incentives, and the tax incentives granted to Evergreen Solar will be reviewed in this broader context.”

On the campaign trail last year, Bump talked up plans to examine tax incentives, saying they should be measured by the benefits provided to Massachusetts citizens and taxpayers and that accountability for public investments “must be built into state government.”

As a candidate, Bump said that all state tax incentives and credits should be reviewed for effectiveness and that she would begin with economic development tax incentives. She estimated state government would forego $1.7 billion in fiscal 2011 due to tax incentives and credits.

Bump also pledged to conduct audits of agencies charged with providing or documenting tax incentives to determine whether agency managers used appropriate procedures, provided objective analysis, measured outcomes as intended, and held recipients accountable for performance.

State Housing and Economic Development Secretary Greg Bialecki said last week that Evergreen had received $21 million in cash grants - $20 million to help build its facility and $1 million for workforce training - $7.5 million in investment tax credits and a long-term lease on state land valued at $2.7 million.

Evergreen has received other forms of public aid, but Bialecki said he did not count in his estimate $13 million in state grants used to build road and utilities infrastructure at Devens and some state taxes the company avoided when paying for equipment.

Bialecki estimated the state can recoup $13 million, including the $7.5 million investment tax credit, which he said won’t be claimed, $3 million in state grants that were tied to a job creation formula, and land costs.

"We’re looking very carefully at what happened here and what lessons can be learned," Bialecki said last week. "This wasn’t so much an investment in Evergreen Solar as it was in the clean energy sector. The purpose wasn’t to benefit a company but to grow an industry and the investment really put us on the map."

In announcing its Devens plant closing plans, Evergreen Solar President Michael El-Hillow said the firm’s production costs in Devens were “much higher than those of our low cost competitors in China.”

“Solar manufacturers in China have received considerable government and financial support and, together with their low manufacturing costs, have become price leaders within the industry,” El-Hillow said in a statement. “While the United States and other western industrial economies are beneficiaries of rapidly declining installation costs of solar energy, we expect the United States will continue to be at a disadvantage from a manufacturing standpoint.”

MassGOP Chairman Jennifer Nassour has called the state’s investments in Evergreen “reckless policy” and urged the Patrick administration to offer a more broad-based approach to economic incentives for companies.

House Minority Leader Brad Jones has said that the Evergreen case should serve as a “lesson to Governor Patrick that throwing money at companies in industries he approves of won’t necessarily translate into success.” Jones said Patrick and Lt. Gov. Tim Murray “should turn their attention to creating an economic climate where all businesses can succeed and thrive.”

Gov. Deval Patrick has defended his administration in light of the Evergreen controversy, saying the process of doling out incentives to individual companies or industries "works well."

"I am disappointed that we are losing these manufacturing jobs to China, but Evergreen produced over 900 jobs for each of the years in question (two or three times what they promised) and that was good for the workers who got those jobs," Patrick said during a recent online chat.

"Evergreen did not use about half of the benefits that were offered to them and we have recovered or will recover most of the rest. Beyond that, we need to ask ourselves whether we are serious about competing for jobs on the same playing field as other states. Far more often than not, we win in a competition. But we have to compete to win."

Senate President Therese Murray told WCVB-TV Sunday that Evergreen “paid us back” $11 million based on an initial state investment of $2.5 million. “I think that’s pretty good,” Murray said.

But Murray added, “Probably their five or ten-year plan was a little aggressive . . . It’s still a loss. There should have been a bit more due diligence. I would have had a bigger clawback - that if the jobs left that the money came back.”

Murray said she’s been told that “solar doesn’t make a profit,” adding, “I’m still grappling with that.”

House Speaker Robert DeLeo, who has also called into question the Evergreen investments, on Wednesday reiterated his support for tax incentives aimed at stimulating film industry business. DeLeo noted that “The Social Network,” “The Town” and “The Fighter,” which all have a Massachusetts connection, tallied 16 Oscar nominations this week.

“These movies, filmed right here in Massachusetts, are a good reminder of how important the film tax credit has been to our state’s economy in these challenging times,” DeLeo said in a statement, referencing House votes from nearly a year ago to block efforts to reduce incentives available to the film industry.

A Department of Revenue report released this month found that the film tax credit cost the state $82.4 million for productions filmed in 2009 and generated $319 million in spending, of which $104 million was spent in Massachusetts. Of the $215 million spent outside of Massachusetts, $82 million paid salaries of $1 million or more to actors, according to the report.

Over the four years in which the tax credit program has been on the books, the total credit-eligible spending for 449 productions claiming the tax credit was $1.047 billion, with 32 percent or $335.5 million paid to Massachusetts residents and 68 percent or $712.3 million paid to non-residents or out-of-state businesses, according to the Department of Revenue.

On Wednesday, Patrick said his newly unveiled budget proposal included a continuation of the film tax credit program.

... By Warren Kirshenbaum

In order to jump-start the economy and defuse some of the economic hardship caused by the recession, the American Recovery and Reinvestment Act of 2009 (the “Act”) attempted to infuse financial benefits and incentives into the economy. One of the sections of the Act benefits supporters and investors of renewable energy. The US is determined to be in the fore front of the renewable energy industry, and the government hopes that the industry continues to prosper despite the volatile economic times. Specifically, Section 1603 of the Act (the “grant” or “grants”) provides grants from the federal government to eligible “persons” (a legal construct including entities) who develop renewable energy systems during the recessionary period. The Federal government already provides tax credits that benefit the renewable energy industry that is credit that reduces dollar for dollar an eligible tax payer’s tax liability, if the taxpayer engaged in a qualifying renewable energy program. However, fearing that investors in renewable energy will not be able to successfully monetize tax credits, Section 1603 provides grants in lieu of the tax credits to interested investors. The purpose of Section 1603 is to temporarily fill the gap that was created by a lack of demand for tax credits from investors and simultaneously decrease American’s dependency on non-renewable energy sources while creating or retaining jobs.

The grant is for qualifying persons who install specified energy system on property during 2009 or 2010. The Treasury will provide grants up to 10% or 30% (depending on the energy system) of qualifying expenses. Persons eligible for the grant include government agencies, 501(c) organizations (non-profits), entities as qualified under IRC sec 54(j) paragraph 4, and partnerships or other pass-thru entities, or any direct or indirect partner of such entities.

Specified energy systems include large wind, closed-loop and open-loop biomass facilities, geothermal, landfill gas facility, trash facility, qualified hydropower facility, marine & hydrokinetic, solar, fuel cells, microturbines, combined heat & power, small wind, and geothermal heat pumps. Qualifying persons will continue to be eligible for the grant even when the renewable energy project is completed after 2010, for so long as the qualifying project began in 2009 or 2010. Beginning a qualifying project is defined as conducting physical work of significant nature either on or off site, costing at least 5% of the total cost of the project. Furthermore, the original use of the energy system must begin with an applicant. Accordingly, a person will not be eligible for the grant by simply purchasing an already installed renewable energy system. The applicant, however, may use pre-owned parts in the facility, but their costs may not exceed 20% of the total cost of the facility.

If less than 5% of the total cost is incurred during the 2009 or 2010 period or only preliminary work was completed during that time, the persons seeking the grant will be disqualified. Preliminary work includes planning or designing, securing financing, exploring, researching, clearing a site, test drilling, or excavation to change the contour of the land. On the other hand, excavation for the foundation or the pouring of the concrete pads of the foundation will be considered as the start of construction. The start of construction also includes the start of manufacturing components, even though the manufacturing is completed off-site.

The Act includes a powerful tool for businesses and individuals who support and are involved in the development of the renewable energy industry. The grant, although currently offered for a temporary period of time, offers an incentive to continue to build renewable energy systems in one’s community. For those who began constructing a renewable energy facility in 2009-2010 period, applying for the Section 1603 grant should be a priority. Although the application for the grant is complicated and often confusing, obtaining up to 30% of the eligible expenses offers a significant resource to assist in making your project a success. Cherrytree Group LLC and Kirshenbaum Law Offices can provide to you the expertise needed to decipher whether you qualify for the renewable energy grant and assist you in applying for and obtaining the grant as well as assist you in monetizing your tax credits.

Thayer Morgan interviews Warren Kirshenbaum Esq. on Distressed Properties and Tax Credits on Brownfields, Renewable Energy, New Markets, Historic and Low Income Housing.

To visit Thayer Morgan's website, Click here

...By Warren Kirshenbaum

Renewable energy is not yet able to be produced in quantities that will satisfy global energy demand, and renewable energy is more expensive than energy produced from fossil fuels, but great strides have been made in recent years in these areas. Furthermore, the costs that the production of fossil fuels are imposing, both on our environment, and financially on the companies producing oil and gas are not factored into the cost per gallon or kilowatt hour of energy production, and perhaps this is a line item that we should start to factor into the cost of the production of energy from fossil fuels if we are going to make a push toward serving the world’s energy needs with renewable resources.

This year, the Deepwater Horizon oil spill (which was both the biggest oil spill in U.S. history and the largest accidental marine oil spill in the history of the petroleum industry) released 185 million gallons of crude oil into the Gulf of Mexico for about three months and has inflicted devastating environmental and psychological damage on the coastal communities in the Gulf, affecting tourism, fishing and drilling, as well as subjecting residents to ongoing restrictions on fishing and shrimping that have affected the livelihoods of thousands of people. BP’s Gulf Oil Spill resulted in the deaths of 11 workers on the rig and injuries to 17 others. BP’s financial expenditures from the oil spill have so far reached $3.12 billion, excluding the $20 billion compensation fund they have set up to reimburse residents and businesses for their losses. Also this year we endured the Copiapo mining accident in Chile, which occurred when the copper/gold mine owned by San Esteban Mining Company collapsed and 33 men were trapped 2,300 ft below ground for 69 days. Fortunately, all of the 33 men were rescued with only one man suffering from pneumonia, and a few others experiencing dental problems. The cost to rescue the men was $20 million. The San Esteban Mining Company has allegedly violated mining regulations previously, and 8 of its employees have died at the mine in 12 years. Adding to the year’s disasters at fossil fuel production sites is the Pike River Mine accident in New Zealand where an explosion at the coal mine has left 29 miners trapped 4,900 feet from the mine’s entrance. The miners are still trapped in the mine and may not be alive. Gas sampling is being tested to ensure that any accidental spark will not ignite the mine when search and rescue operations are undertaken. The Gulf Oil Spill, Copiapo mining accident, and Pike River Mine accident were stark reminders that our pursuit of energy derived from fossil fuels is causing an irreversible deterioration of our planet, its natural resources, our environmental balance, and is subjecting us to unacceptable losses in human life.

There are a multitude of renewable resources, but this post will focus on solar and hydro energy production, as these methods of renewable energy production are, in my opinion, poised to experience significant growth in the next few years.

Solar energy production is significantly more expensive than hydro, due to the cost of the solar panels themselves. Hydro has languished for decades as a method of creating renewable energy, mainly due to the environmental objections that a hydro project creates, and the expensive federal regulatory requirements of such projects. However, both forms of renewable energy are attractive. Solar projects, unlike wind projects do not create a danger to birds, cattle, and other animals, solar fields are not large and aesthetically displeasing, and do not generate loud whirring sounds that intrude on people’s quality of life. Consequently, as solar installations have very little negative environmental effect, they are generally easy to permit. Solar energy is, however, expensive to produce, as the technology that underpins the solar panels have traditionally made the installation of solar fields expensive enough to impede their development as a commercial enterprise. As with all technology, as solar technology develops, its cost has begun to decline, which should make solar projects more viable. Hydro, is very clean and unobtrusive to the environment, and is relatively safe to produce, but it can affect the migratory pathways of fish, and a dam breach could be detrimental to downstream human habitats. Consequently, new dams have not been constructed in many years. In fact, the stock of dams has decreased over the decades. Moreover, the prospect of new dams being built is relatively slim (due to the environmental challenges and the time period involved in getting Federal Energy Regulatory Commission (FERC) approval). Inorder for hydro production to increase, the capacity of existing facilities would need to be expanded. Legislative changes that limit environmental objections to the process of FERC approval, renewal, and re-licensing would need to be implemented to help to stimulate hydro production, this will require intensive lobbying, but it can be done.

Nevertheless, the point being made here is that, despite the higher cost of producing renewable energy, the cost of energy production from fossil fuels is enormous,not only the monetary cost, but the environmental cost as well as the cost of human life. This is more of an IOU being tagged to the planet than a current cost, which leads to the conclusion that we have no choice but to pay the higher monetary price for renewable energy now and retire the bigger IOU that future generations will inherit.

By Warren Kirshenbaum

In the recent election, Question 2 on the Massachusetts ballot asked whether voters should “repeal the law allowing developers of projects that include low- or moderate-income housing to apply for a single comprehensive permit from a city or town’s zoning board” The law in question is M.G.L. Chapter 40B, which is an expedited permitting statute. Chapter 40B creates an expedited permitting procedure for those developers that include an affordable component to their development. Specifically, in order to receive a permit under 40B, 25% of the housing units to be built must be considered affordable housing. The towns in the Commonwealth that are subject to 40B are those towns whose affordable housing stock does not exceed 10% of their total housing inventory. 40B subjects the Zoning Board to a streamlined procedure greatly reducing the time and cost of the permitting procedure, and limiting the ability of the town to deny the permit.

On Tuesday, November 2nd, Massachusetts voters, in a decisive victory of 58% to 42% voted not to repeal 40B.

This trend in the voting patterns comports with conversations that I had with people, in which it seemed that there was a lot of non-information, and even misinformation on this issue, and as this movement to repeal 40B could resurface again, I am hoping to shed some light on the issue in this post.

The main underlying issue that I sensed is the NIMBY one. Not in My Back Yard is understandable, and is a concern about falling property values and the denigration of a neighborhood when some of the housing is affordable. Declining property values is indeed a fallout of affordable housing, as the financing options discussed below are very favorable to developers or affordable buyers and, therefore, their properties. These affordability factors lower the market value of a single family home, or a multifamily property, and, therefore, affect the comps of other sellers in the area. This effect is a micro-economic effect, and a relatively minor one at that, as lower comps would affect a financing appraisal in small part, and the market value of a sale with even less consequence. In any event, 40B historically has mostly been used for multi-family construction, and 95% of the projects permitted under 40B are multi-family apartment complexes or condos.

Practically speaking, if a condo development were built near your home, whether it was affordable or market-rate your property value and property enjoyment would decline, so this is not an affordable housing, or 40B issue, as much as it is a land-use or urban planning issue.

Secondly, people I spoke to understood 40B to be a financing statute, and assumed that it gave developers funding to pursue their affordable housing projects. 40B is an expedited permitting statute that allows an override of municipal zoning authority to promote affordable housing. It is not a financing statute. There are forms of financing that are available to developers of affordable housing, such as the Federal Low Income Housing Tax Credit, HUD insured mortgages, tax-exempt bonds, Community Block Grants, and other state and federal sources of funding, and developers use these sources of funding once they are permitted, whether pursuant to 40B or otherwise. 40B is not a preamble to these sources of financing.

While realizing that concern over retaining a leafy suburban lifestyle, or holding on to a paper appraisal of a home value may be important to some in the micro-economic sense, it is not a positive economic trend in the big picture that justifies the repeal of a statute such as 40B. Consider this: a community is more than just our home values; it is a collection of individuals, families, homes, stores, houses of worship, and so forth. While we are happy when we see a fire truck scooting off to tame a brush fire near our neighbor’s yard, we would be foolish to attempt to exclude the possibility that the first responders on the fire-truck also be given the opportunity to live among us in our community by creating affordable options here, and not force them to be relegated to living in a far-off town for affordability reasons.

It should also be pointed out since its enactment, 40B has been credited with spurring upwards of 80% of the new development in Massachusetts, and there are several new developments, as well as many ongoing ones that would not have been built, or will not now be completed were 40B to be repealed, or if it didn’t exist in the first place. This construction has created jobs, spending, and economic activity that we rely on for our stability, and, particularly in our economic malaise, we can little afford to repeal a statute that has created such substantial growth and employment.

The Citizens Housing and Planning Association (“CHAPA”), a prominent Massachusetts non-profit that plays a decisive role in encouraging the production and preservation of affordable housing claimed that this vote evidenced the largest victory margin of any ballot campaign. CHAPA claimed that, “over 1.2 million voters and 80% of cities and towns affirmed their support for protecting the affordable housing law for seniors and working families in urban, suburban, and rural communities all across the state.” While this is true, an analysis of the voting results shows that the larger urban centers voted strongly in favor of not repealing 40B, constituting the largest slice of the 16% victory margin, while the voting in many towns was closer than this 16% victory margin suggests. Many towns actually voted in favor of repeal. Cities and towns such as Worcester, Somerville, Quincy, Arlington, Boston, Brockton, Lawrence, New Bedford and Cambridge opposed repealing 40B in large numbers, and they were joined by the suburban bastions of Newton, Needham, Lexington, Brookline, and Milton, which all together carried the NO vote on this question. Significantly, however, there were also several towns that voted to repeal 40B, such as Abington, Amesbury, Billerica, Bridgewater, Sudbury, Stoughton, Wilmington, Westford, Chelmsford, Tewksbury, Walpole, and Canton.

 ... by Warren Kirshenbaum

In this period of difficulty obtaining adequate bank financing, it benefits developers to structure the financing of projects using mechanisms that allow for less of an equity contribution.   Owners/developers of affordable housing are able to receive low-income housing tax credits (“LIHTC’s”) by providing for an indirect federal subsidy of qualified low-income housing.  Owners receiving LIHTC’s will rent to tenants earning 80% or less of the area’s Average Median Income (“AMI”). These tenants will qualify for a below-market rent, which the tax credits effectively subsidize in exchange for the project’s commitment to restrict rents, and to rent to low-income people for a designated time period.  LIHTC’s offset federal taxes on a dollar-for-dollar basis for a ten year period and are awarded to owners of low income housing by application to the State’s housing department. Developers “sell” the tax credits at a discount to syndicators (investors) to raise the project’s equity, resulting in less or no equity being needed from the developer.  The developer is required to restrict rents to below market rates, making the property affordable to low-income individuals, and this restriction can remain in place for 15 years or more.  Tax credit investors usually claim a limited partnership interest with a 99.9% interest in the limited partnership, as well as participation in cash flow or sale proceeds.  Although tax credit deals have many variations, developers usually utilize 9% tax credits for new construction, or substantial rehabilitation with no federal subsidy.  These tax credits subsidize 9% of the project’s qualified building costs every year for ten (10) years; or 4% tax credits for federally subsidized new construction or acquisitions of existing buildings.  This program subsidizes 4% of the project’s qualified building costs every year for ten years.  As with most deals, the equity and debt are funded in periodic draws from the project with requirements stipulated by agreement.  These projects must restrict their rents and benefit low-income tenants for a fifteen year compliance period.  This restriction is usually detailed in a recorded Land Use Regulatory Agreement (“LURA”).  Consequently, a tax credit financed project requires constant monitoring of the rents and income requirements of the tenant population to avoid a recapture of the tax credits by the IRS.  In an affordable housing transaction, a Stipulated Sum contract is awarded for the construction, and a property management company will manage the project, thereby shouldering the compliance responsibilities of IRC $42.  Various other funding sources add to the multi-layered financing structures of these deals.  

We, at Kirshenbaum Law Offices and the Cherrytree Group have experience in all aspects of LIHTC transactions, from the development and construction related issues to the financial structuring and tax credit implications and structuring of the transaction.  Specifically, we can assist in many of the issues that arise in LIHTC deals, such as:

• Purchasing affordability restricted apartment complex(es);
• Obtaining bridge loans or pre-development loans;  
• Assistance with loan conversions;
• Post Compliance Period Restructurings;  
• Historic tax credit rehabilitation transactions with or without an affordable component;
• HUD transactions; and
• New Construction for Multifamily and Seniors.