, United States General Accounting Office G.0 , -, Testimony For Release on Ixrw-Incane Housing Tax Credit Utilization and Syndication Delivery Ekpectedat 9:30 a.m. EDT Friday April 27, 1990 Statement of John M. Ols, Jr., Director Housing and Conmunity Developkent Issues Resources, Cd ty and Econanic Development Division Before the Suharmittee on HUD/Moderate Rehabilitation Investigations Cam-Lit&e on Banking, Housing, and Urban Affairs United States Senate ~YfL-53 GAO/T-RCED-90-73 GAO Form 160 (121’87) Mr. Chairman anq Members of the Subcommittee: We appreciate‘the opportunity to assist the Subcommittee in analyzing the ut,ilization of the low-income housing tax credit program. Today, I would like to discuss three issues. First, the amount of low-income housing tax credits allocated to states and awaxded to projects for calendar years 1987 through 1989 and the number of low-income housing units developed in connection with these awards. Second, the syndication process used to assist in raising capital to finance low-income housing projects that have been awarded tax credits. And, third, the net amount of equity capital raised through the syndication of projects awarded tax credits relative to the amount of the credit award. Tax credits are intended to induce investors to supply equity for low income housing. Since the low-income housing tax credit program began in 1987, award and use of the credits has steadily increased from about 20 percent of the total amount allocated to states in 1987 to about 98 percent of the allocation in 1989. By the end of 1989, about $565 million worth of initial-year credits had been awarded in connection with the development of approximately 236,000 low-income housing units. The credit program now represents the federal government's primary subsidy for encouraging low-income housing production. Syndication is the process of structuring financial arrangements to secure cash from outside investors. Most tax credit syndications have been conducted as public offerings with limited partnership interests in tax-credit-eligible projects being sold to individual investors. A number of syndications, however, are being conducted as direct placements, usually to corporate investors. When tax credits are used, as with any federal assistance mechanism, costs are incurred that are necessary to attract and manage funds. When the federal government issues tax credits, it 1 incurs a ,tax expenditure equal to the tax revenues foregone. For low-income housing,development, some of the tax expenditures are . used to attract equity capital so that investors can realize a competitive rate'of return. The capital raised in this manner, however, is not completely available to directly invest in low- income properties. Expenses incurred to sell the partnership interests and certain fees for acquiring the properties are paid for out of investors' equity which reduces the amount available to fund the projects. PROGRAMBACKGROUNDAND TAX CREDIT UTILIZATION. 1987-89 As you know, the Low-Income Housing Tax Credit Program was created in the Tax Reform Act of 1986 and was intended to increase the supply of rental units for low-income families by using tax benefits to induce equity investment to buy, build, or rehabilitate such housing. Projects that were awarded credits prior to 1989 had to be used as low-income housing for a 15-year period or they were subject to recapture of a portion of the credit award. However, because of uncertainties about how the program worked and reservations about the usefulness of the program, initially few developers participated. With increased familiarity, tax credit usage has steadily grown, and now represents the federal government's primary low-income housing production subsidy. Recently, Section 7108 of the Omnibus Budget Reconciliation Act of 1989 (P.L. 101-239) extended the program through calendar year 1990. This legislation permits the Treasury Department to redistribute unallocated credits to states that need them. It also extended from 15 to 30 years the maximum length of time that a credit-eligible project would have to be used for low-income housing. It also placed greater responsibility on state credit allocation agencies by requiring them to develop allocation plans for awarding credits. These plans are to set forth project 2 selection criteria, . and selection preferences and priorities. The legislation did not, however, Clearly place responsibility on either HUD or state agencies for monitoring credit recipients' compliance with program requirements. Officials of the Treasury Department told us that their compliance monitoring efforts would address normal tax audit procedures, but not focus on housing issues such as tenant eligibility or whether projects that received credits conformed to housing standards. The amount of credits awarded by state agencies to projects is partly determined by calculating a percentage of the project's acquisition and rehabilitation costs. The credit award can vary depending on whether subsidized, or below-market rate financing or tax-exempt bonds are used for project development. In addition, numerous other considerations, such as the availability of unused credit allocation, determine the amount of credit ultimately awarded to a given project. In 1987, the first full year of the tax credit program, states were authorized, on the basis of $1.25 of credit per capita, to allocate about $313 million in tax credits to eligible projects. However, only about $63 million in credits, or about 20 percent of the authorized amount, was awarded to about 34,000 housing units. In 1988, the use of credits had increased to about $202 million for assistance to about 78,000 units. By 1989, of a total authorization of $314 million, $307 million, or about 98 percent, was allocated to about 125,000 low-income housing units. For 1990 only, the per capita rate of credit for each state is 93.75 cents. Attachment 1 provides a summary of the use of credits for years 1987-89. Attachments 2 through 4 show the use of credits, by state, for the same period. Also shown in the attachments are the types of projects assisted using tax credits. For the entire period from 1987 to 1989, nearly half of the credits awarded were used in connection 3 with newly constructed low-income housing; about one-fourth for substantial rehabilitation projects: and the remainder for either the acquisition or acquisition and minor rehabilitation of existing low-income projects. * According to information for calendar years 1987 and 1988, the only years for which this information is available, about 82 percent of the projects that received credits were small projects consisting of 50 or fewer units. In addition, about 62 percent of the projects that received credits also received other federal subsidies such as HUD Section 8 rental subsidies. SYNDICATING LOW-INCOME HOUSING AND THE EFFECT OF PASSIVE ACTIVITY RULES Reportedly over the past 20 years, most private investment in low-income housing has been through limited partnerships. In many instances, large investment houses accumulate a pool of funds from prospective investors and then look for projects to invest in. In other cases, a developer already has located a project and is looking for permanent financing. In either case, most financing generally comes from a bank or other lending institution in the form of a mortgage. The remainder of the private financing often comes from the sale of ownership shares to limited partners to whom tax benefits of the project are passed. Often, large investment houses accumulate a pool of funds from prospective investors and look for projects to invest in. The process of creating and marketing limited partnerships to acquire, develop, or operate real estate investment property is called syndication. Limited partnership interests in tax-credit- eligible projects are usually sold to outside investors who, in the hope of realizing tax or other project benefits, invest in the project syndications. 4 Another way the market operates is that syndicators prepare a plan for the project(s) projecting cash requirements, development costs, cash income flows, projected deductible losses and depreciation (if any), and tax credits available to investors. The price of a share is then fixed at a level that provides investors with a projected return sufficient to induce them to participate given the risk associated with the deal. The shares are then marketed by making them publicly available through an underwriter or broker, or they are privately placed by the syndicator. In this manner, tax credits awarded to a project can be used to raise capital that the project developer can use to help finance the project. As we reported last August, these individual partnership sales can increase the developer's gains from the project. An essential feature of any limited partnership is that the limited partner or partners have no role in day to day operations. This makes every limited partnership a passive activity for the purposes of the Internal Revenue Code. Special restrictive rules apply to the tax treatment of losses and credits produced by passive activities. Under general principles of partnership law, limited partners may share, proportionately to their investment, in any profit or loss the partnership business produces. Accordingly, limited partners can deduct partnership losses and offset tax liabilities with any tax credit on their individual income tax returns. This led to the creation of many limited partnerships as tax shelters. The Tax Reform Act 1986 eliminated many tax shelters by prohibiting individuals from deducting losses derived from a passive activity. However, the Congress created exceptions, including one for low income housing tax credits. Limited partners are allowed to deduct up to $25,000 in losses from residential rental property on 5 the basis of a lesser participation reguirement.l Under a special rule, .investors 'in‘low income housing tax credit partnerships are allowed to take the equivalent of a $25,000 deduction in tax credits derived from the same passive activity. A $25,000 deduction for a taxpayer at the 33% marginal rate would yield a reduction in tax liability of $8,250. Accordingly, the maximum low income housing tax credit that any individual can use, or is likely to seek in one year is $8,250. The passive activity rules just described apply to individual taxpayers, but do not apply to most corporations. A corporate investor can make a larger investment because a corporation can receive and use passive losses without the limitations that apply to individuals. They can also use other passive tax benefits such as depreciation allowances and interest deductions not available to individuals. This is a reason most direct placements (large amounts of investment and related tax benefits offered to one or a few investors) are made to corporations. . tion Svndlca Structures Varv Widelv Low-income housing tax credit syndications can be structured in many different ways. The simplest form consists of a developer who owns and develops a project and who creates a limited partnership in which he will participate as a general partner. With the assistance of a syndicator, the developer/general partner finds investors and offers them interests as limited partners. In a more complex and more typical arrangement, a two-tiered partnership is formed. The pool of investors brought together by 1 Originally, the entitlement to a deduction and to a low-income housing tax credit equivalent was phased out for taxpayers with incomes over $200,000 and reached 0 for taxpayers with incomes over $250,000. The 1989 amendments to the Code, however, lifted the phase out for low-income housing tax credits. 6 the syndicator is organized as a limited partnership, and that limited partnership in turn invests as a limited partner in one or more developer/project level limited partnerships. Depending on the terms of the partnership arrangement, various costs, benefits, w and obligations can be structured to meet the'reguirements of the various parties to the partnership. For example, some syndications may be structured so that all partners fully share in and distribute realized appreciation, or increase in value, (if any) of acquired properties at the end of the syndication period. Other syndications may limit the amount of appreciation limited partners may share in. On the other hand, some syndications may be structured to provide for a return of the limited partners' original investment at the end of the syndication period. Still other syndications may provide only for the distribution of annual benefits to the limited partners with no lump-sum repayment of investment at the end of the syndication period. In addition to these variations, many syndications are structured to allow for reduced payments of investment proceeds if specified project operating goals or targets are not met. COSTS ASSOCIATED WITH SYNDICATING TAX CREDITS Because of the myriad possible variations in the way individual syndications are structured, no two syndications are exactly alike, and it is difficult to characterize the "typicaltt syndication, In addition, precise cost data for low-income housing tax credit syndications is not available because the partnerships are usually formed for a 15-year period including the lo-year period over which awarded tax credits are used by eligible projects. Because the tax credit program has been in existence for only 3 years, no partnership formed to invest in credit projects has reached the end of its partnership term. Therefore, precise, 7 actual data on investor yields and some of the syndication costs cannot be known'at.this point. However, two basic elements are associated with syndicating tax credits. First, equity must be raised by attracting investors who contribute _capital, a portion of which is used as the downpayment on the projects' mortgages, in the expectation of receiving a return on their investment. To provide investors this expected return for incurring certain risks, the amount of equity invested will be less than the amount paid out in the form of tax credits, net operating cash proceeds, and any residual value of the property. Second, syndication transaction, or front end costs, such as selling commissions, offering, and organizational expenses must be paid. These commissions and expenses are for services such as advertising, legal advice, printing, accounting, and appraisals; and for other costs associated with acquiring real estate such as title insurance and mortgage loan fees. Tax menditure Used to Attract Private Investor Caoital Private investors are willing to invest in a syndicated limited partnership because of their expectations about earning a return on their investment. This expected return is typically expressed as an estimate of an annual percentage rate of return, or yield for a specified amount of invested capital into the fund. For low-income project syndications, this rate of return is often (though, not always) assumed to come primarily from the tax benefits of the credits awarded to the project. The projects are usually heavily leveraged and often do not generate other significant sources of potential return on investment such as net positive cash flows from operations. In addition, some syndicators we talked to told us that they often assume a zero residual value at the end of the syndication period, particularly since the maximum compliance period has been extended to 30 years. Under 8 r these ass'um ptioqs virtually all the investors' return m ust com e from the projectsl‘tax benefits. Under this type of syndication deal, for a paym ent into the fund, an investor expects to receive annual allocations of credits (over the lo-year term of the project's credit award schedule) that reduces the investor's tax liability in an amount that represents the value of his capital contribution plus an extra amount that represents the investors' expected return. As an over-sim plified exam ple, let's discuss a hypothetical project that has been awarded $100 in tax credits to be paid each year over the next ten years. This award will m ake $1,000 worth of tax credits available over the next ten years. As previously noted, syndication funds are often large pools of funds that are amassed to purchase interests in m any projects that individually conform to the yield expectations of the syndicators. However, to clearly dem onstrate the concepts involved, we are using an illustration that consists of one hypothetical project. For our exam ple, we will assum e that the project is a new construction project, has no residual value, has no other federal subsidy, and the tax credits are the only source of return on investm ent. In order for the hypothetical project to have been awarded $1,000 worth of tax credits, about $1,111 would have to be spent on the project's developm ent, not including land costs. At the federal governm ent's current cost of borrowing (about 8.5 percent average annual rate for lo-year Treasury Notes), the $1,000 in tax credits have a present value of $712. W ith no other project benefits involved except the tax credits, in this exam ple, an individual investor could realize a 13-percent rate of return (after-tax) by m aking a one-tim e payment of $613 in order to receive $100 worth of tax credits for each year for 10 consecutive years. Therefore, an immediate cost of raising 9 capital in this.way is $99, which represents the difference between the present value of the credits and the price paid for them and is compensation for-the investor for risk incurred. On the basis of our preliminary work, we found that for public offerings, current yields to investors in low-income projects are projected to range from about 10 to 22 percent, depending on many factors such as the type of low-income housing involved, investor perceptions about projects' risk, and project financing structures. The higher the required projected yield, the less capital that will be raised from investors for the same amount of tax credits unless other project benefits, such as positive cash flows, contribute to the yield. Transaction Costs for Public Offerinas Front end costs for syndications are paid from the amount of equity raised from investors. In a July 1989 report,2 we found that the maximum allowable proportion of raised capital used to pay syndication fees and expenses varied considerably. Depending on the syndicator and complexity of the deal, the maximum allowable fees specified in partnership prospectuses varied from about 17 percent of the capital raised to about 34 percent for the 19 publicly-available partnerships we examined that marketed low- income housing tax credits. On average, the front end costs of syndications for low-income housing are projected to account for a maximum of about 26.5 percent of the capital raised. Actual costs are expected to be somewhat less than the maximum allowances. In addition, some syndicators also require a working capital reserve of 3 to 5 percent of the capital raised. According to industry analysts, the proportion of fees and expenses spent by publicly offered low-income housing tax credit partnerships are generally 2TAX POLICY: Costs Associated With Low Income Housing Tax Credit Partnership (GAO/GGD-89-100FS). 10 r r within guidelines prom ulgated by the North A m erican Securities Administrators Association, Inc. Using our exam ple above, and assum ing a 3-percent working capital reserve requirem ent, about $182, or 29.5 percent of the $613 raised, wobld be required to cover the transaction costs associated with the syndication. For purposes of this exam ple, these front end costs are assum ed to be non-qualified credit expenses. Accordingly, out of an original $1,000 in tax credits with a present value of $712, $99 is the risk prem ium to attract capital from private investors; and $182 is the estim ated front end cost. In this exam ple, then, $431, or about 60.5 percent of the present value of the tax credits would be left and potentially available as equity financing for the project. (See flow chart on attachm ent 5). While this amount is significantly less than the present value of the project's credits, it can be viewed as leveraging $680 ($l,lll-$431) of associated debt financing in order to bring the total capital investm ent into the project up to $1,111. The amount of capital raised and potentially available for project developm ent, however, is highly dependent on such factors as investor yield requirem ents, and assum ptions about whether investors' initial capital contributions are returned to them at the end of the syndication. Using the sam e exam ple above, let's now assum e that investors would accept a lo-percent yield instead of 13, and that their initial capital contribution was returned to them at the end of the syndication period. Under these assum ptions, the amount of capital raised would be $795, and with the sam e percentage of front end costs, the amount of capital raised that would be potentially available for the project would be $559. If investors required a 15-percent yield, capital raised and potentially available for the project would be $444. 11 , Direct Cornorate Placements . \ As in the case of public offerings, some portion of the value of the credits would be used to attract corporate investments in low-income housing syndications. However, for direct corporate placements, expected investor yields typically consist of at least two components. First, because the corporate investor is usually exempt from passive activity restrictions, any purchases of low- income housing tax credits are fully usable by the corporation to reduce its corporate income tax liability. Second, unlike individual investors, corporate investors can also fully use any project operating benefits, such as depreciation and interest deductions, as a reduction of any corporate income. Therefore, unlike individual investors, corporate investors in low-income housing can benefit from two separate tax subsidies--the tax credits and the passive activity deductions. We were told that, because they have more investment options and opportunities than individual investors, corporate investors generally seek higher yields from their investments than individuals. When investing in tax credit projects, corporate investors can typically realize higher yields for the same investment because they can also use other project benefits such as depreciation in addition to the yield attributable to the credits. Corporate investors we contacted told us that required total yields are projected to range from 15 to 20 percent. Officials of organizations that usually syndicate projects using direct placements told us that the transaction costs for these deals were generally projected to be considerably less than for public offerings. They said that the transaction costs, as a percentage of the capital raised, ranged from about 8 to 15 percent, including a typical working capital reserve of 3 to 5 percent. Direct placement syndicators told us that their transaction costs were generally smaller than those of public 12 offering.'syndicqtors. They said that while certain costs, such as legal'and accounting fees were comparable to the costs associated with public offerings, other costs, such as offering and selling expenses were considerably less when selling to a single investor. . We have pet-formed limited work regarding the front end costs of direct placements to corporate investors for six partnership offerings. Four of these partnerships appeared to have fees and expenses as a proportion of equity that were similar to those of the publicly offered partnerships. Two of the six offerings had costs and fees lower than the other offerings. However, there was not sufficient information to account for the differences among fees and expenses. CONCLUSIONS Use of the low-income housing tax credit program has steadily grown since the program began, and the program now represents the nation's primary effort to encourage low-income housing production. The increased importance of the program requires that it be used as efficiently and effectively as possible. Recent legislative program changes, extending the program through calendar year 1990, also could enhance the program's effectiveness. However, it is not possible to know in advance the amount of new housing construction or rehabilitation that will be generated by a given amount of tax credits made available. Each syndication will provide equity to support a single property or a pool of properties that will have widely varying yield structures. While tax credits will generate equity investments, and one can estimate the value of taxes foregone to attract the investments, and precise data on actual yields can only be known after syndications have been liquidated. Further, it is not known how many credit projects have an economic viability that would have generated equity investments in the absence of the tax credits. 13 Many issues associated l with the use of the program will require further study to ensure that maximum program efficiencies are achieved. For example, at this point, many questions remain unanswered. . -- Can transaction costs be reduced so that more of the investors' equity is potentially available for project development? Can this be done without lessening syndicators' willingness to package deals? -- What would be the implications of limiting tax losses by excluding corporate investors who receive more tax benefits than individuals? -- How do the costs and benefits of other financing approaches for low-income housing, such as direct grants, compare with a program such as tax credits administered through the U.S. tax code? Answers to these and many other related questions should be known before any major housing policy financing initiatives are undertaken. In any event, if the existing tax credit program is to be continued on either a temporary or permanent basis, it is important that adequate controls are developed to ensure that projects that receive credits are maintained and operated in accordance with program requirements. Projects that have been awarded credits should be carefully monitored to ensure that they continue to qualify for the annual credits by serving low-income families. Effective monitoring procedures, coupled with clearly defined responsibilities for compliance reviews and appropriate sanctions for non compliance, should be established to discourage program abuses. W-B e-w --- --- W-B 14 . I&. Chairman,.this concludes my statement. I would be pleased to respond to any questions that you or members of the Subcommittee may have. . . 15 -1 . -1 . . Year 1987 1988 1989 Total Taxcreditauthority $313,113,750 $303,887,310 $314,230,800 $931,231,860 Tax credit allocation * 62,885,954 202,227,453 307,320,726 572,434,113 Fercentofauthorityused 20.08 66.55 97.80 61.47 Total/units 38,164 91,062 133,887 263,113 llaw-irwxme credit units 34,491 77,825 l24,518 236,834 ErwJwutoflaw-incane cxedit units New Con&n&ion 14,455 33,947 62,590 110,992 SubsbntialMhab 10,895 20,038 26,533 57,466 2,595 13,073 21,962 37,630 6,546 10,767 13,433 30,746 EmakaltofLaw-Incane crdit units 100.00 100.00 100.00 100.00 &=-=-PI Newcbmtmctian 41.91 43.62 50.26 46.86 31.59 25.75 21.31 24.26 7.52 16.80 17.64 15.89 18.98 13.83 10.79 12.98 *Thisistheaistforthefirstyear,thism6tis . l.lmmedfor~0fthenext10years. 16 ATTACHMENT II . ATTACHMENT II . . \ STATE SUMMARYOF TAX CREDITS USAGE IN CY 1989 Agency Authority Percent Credit used units ---------------------------------------------------- Alabama w $ 5,158,750 99.93 2,676 Alaska 641,250 71.06 375 Arizona 4,561,250 91.01 1,414 Arkansas 3,027,500 78.78 224 California 35,210,OOO 99.57 7,960 Colorado 4,112,OOO 99.67 1,514 Connecticut 4,017,500 100.00 587 Delaware 825,000 100.00 212 District of Col. 782,500 100.00 202 Florida 15,471,250 100.00 5,600 Georgia 8,001,250 100.00 3,179 Hawaii 1,366,OOO 100.00 268 Idaho 1,248,750 100.00 490 Illinois 9,372,842 99.52 3,407 Illinois-Chicago 5,021,900 100.00 1,866 Indiana 6,968,750 99.69 3,188 Iowa 3,500,000 100.00 2,099 Kansas 3,108,750 100.00 0 Kentucky 4,651,250 100.00 2,973 Louisiana 5,525,OOO 99.89 3,493 Maine 1,507,500 100.00 718 Maryland. 5,805,OOO 100.00 1,880 MA. I EOCD 7,391,250 100.00 1,534 Michigan 11,625,OOO 100.00 5,248 Minnesota 5,382,500 100.00 2,039 Mississippi 3,283,750 100.00 2,144 Missouri 6,424,OOO 99.85 3,260 Montana 1,005,944 38.56 135 Nebraska 2,001,250 100.00 966 Nevada 1,325,OOO 100.00 697 New Hampshire 1,371,250 80.58 424 New Jersey 9,650,OOO 100.00 1,889 New Mexico 1,887,500 100.00 886 New York HDC 1,300,000 100.00 89 New York DHCR 22,372,500 99.77 4,553 17 . r ATTACHMENT II - ATTACHMENT II . Agency 'Authority Percent Credit used units ---------------~------------------------------------ New York MLEAC 1,628,489 100.00 1,164 North Carolina 8,109,OOO 99.83 3,469 North Dakota - 828,750 94.67 358 Ohio 13,590,000 99.01 9,414 Oklahoma 3,670,875 78.75 2,374 Oregon 3,426,250 100.00 1,506 Pennsylvania 15,033,750 100.00 5,227 Puerto Rico 4,115,ooo 88.74 1,076 Rhode Island 1,243,750 100.00 355 -7 South Carolina 4,366,250 100.00 2,089 South Dakota 893,750 100.00 553 Tennessee 6,148,750 99.96 3,004 Texas 20,975,ooo 93.94 16,425 Utah 2,100,000 90.00 490 Vermont 6(bCS,OOQ. 100.00 m&4.6& .z.*_ -,: .= Virgin Islands 140,000 90.23 48 Virginia 7,518,875 100.00 2,363 Washington 5,825,875 98.90 2,418 West Virginia 2,355,OOO 60.69 710 Wisconsin 6,072,500.: 100.00 2,800 Wyoming 590,000 4.67 25 ---------------------------------------------------- Total $314,230,800 97.80 124,518 ---------------------------------------------------- Source : National Council of State Housing Agencies / Urban m ncome Housing TBK'-~ Sutiey. 18 ATTACHMENT III ATTACHMENT III . . . STATE SUMMARYOF TAX CREDITS USAGE IN CY 1988 Agency Authority Percent Credit used units ---------------------------------------------------- - Alabama $5,103,750 23.14% 877 Alaska 656,250 0.00% 0 Arizona 4,232,500 76.89% 1,091 Arkansas 2,985,OOO 26.73% 559 California 34,578,750 54.63% 5,657 Colorado 4,120,OOO 85.01% 828 Connecticut 4,013,750 99.97% 1,032 Delaware 777,500 100.64% 819 District of Col. 805,000 45.42% 171 Florida 15,028,750 77.44% 4,716 Georgia 7,777,500 99.93% 3,658 Hawaii 1,353,750 3.40% 18 Idaho 1,247,500 101.60% 600 Illinois * 11,980,410 50.72% 1,957 Indiana 6,913,750 28.69% 478 Iowa 3,542,500 12.51% 414 Kansas 3,095,ooo 100.00% 1,054 Kentucky 4,658,750 52.41% 462 Louisiana 5,576,250 57.17% 2,543 Maine 1,483,750 90.00% 618 Maryland 5,668,750 100.00% 2,323 Massachusetts 7,318,750 100.00% 1,730 Michigan 11,500,000 88.78% 3,940 Minnesota 5,307,500 75.50% 1,700 Mississippi 3,281,250 36.39% 906 Missouri 6,378,750 95.41% 2,747 Montana 1,011,250 20.42% 102 Nebraska 1,992,500 85.66% 685 Nevada 1,258,750 57.51% 397 New Hampshire 1,321,250 68.12% 223 New Jersey 9,590,ooo 67.26% 1,552 New Mexico 1,875,OOO 100.00% 802 New York HDC 940 New York SDHCR * 21,281,250 100.00% 3,862 North Carolina 8,016,250 66.79% 2,635 19 a- , ATTACHMENT III - ATTACHMENTIII . Agency ' Authority Percent Credit used units ,---------------~,,,,,,,,,,,,,------------------------------- North Dakota 840,000 5.27% 47 Ohio 13,480,OOO 54.09% 4,294 Oklahom a 4,090,000 42.06% 1,273 Oregon 3,405,ooo 99.90% 874 Pennsylvania 14,920,000 30.16% 1,519 Puerto Rico 3,995,650 92.18% 1,179 Rhode Island 1,232,500 100.00% 361 South Carolina 4,281,250 67.52% 1,759 South Dakota 886,250 29.31% 227 Tennessee 5,068,750 57.06% 1,455 Texas 20,986,250 50.31% 5,127 Utah 2,100,000 10.05% 99 Vermont 685,000 100.00% 274 Virgin Islands 140,000 96.34% 44 Virginia 7,380,OOO 82.09% 1,925 Washington 5,672,500 68.21% 2,032 West Virginia 2,371,250 76.52% 716 W isconsin . 6,008,750 90.15% 2,334 Wyoming 612,500 83.53% 190 ---------------------------------------------------- Total $303,887,310 66.55% 77,825 * Ill-Chicago DOH $7,600,000 and New York MLEAC $7,600,000 not included in state total authority Source : National Council of State Housing Agencies / Urban Institute Low-Incom e Housing Tax Credit Survey 20 , ATTACHMENT IV - ATTACHMENT IV . . \ STATE SUT4KARY OF TAX CREgITS USAGE IN Cy 1987 Agency Authority Percent Credit used units --------------------------------------------------- Alaqama w $5,000,000 23.94 443 Alaska 670,000 9.30 22 Arizona 4,150,000 14.23 249 Arkansas 2,970,ooo 10.89 219 California 33,730,ooo 15.09 2,497 Colorado 4,080,OOO 95.75 1,581 Connecticut 3,990,ooo 11.92 191 Delaware 790,000 14.42 144 District of Col. 780,000 89.10 356 Florida 14,590,000 9.15 1,251 Georgia 7,630,OOO 19.93 1,342 Hawaii 1,330,000 0.00 0 Idaho 1,250,OOO 2.56 32 Illinois * 14,477,500 4.11 755 Indiana 6,880,OOO 11.67 413 Iowa 3,560,OOO 4.95 0 Kansas 3,080,OOO 67.37 1,263 Kentucky 4,660,OOO 41.55 1,899 Louisiana 5,630,OOO 25.68 1,041 Maine 1,470,000 14.31 96 Maryland 5,580,OOO 21.29 594 Massachusetts 7,290,000 58.87 1,361 Michigan 11,430,000 8.95 731 Minnesota 5,241,250 34.42 921 Mississippi 3,280,OOO 20.11 512 Missouri 6,330,OOO 29.38 1,065 Montana 1,020,000 61.11 170 Nebraska 2,000,000 15.99 176 Nevada 1,200,000 94.48 445 New Hampshire 1,280,OOO 3.10 31 New Jersey 9,525,ooo 14.43 378 New Mexico 1,850,OOO 43.46 323 New York HDC 7,600,OOO 100.00 917 New York SDHCR 22,220,ooo 5.42 1,059 North Carolina 7,910,000 17.02 741 21 r A T T A C H M E N IV T * A T T A C H M E N IV T . Agency . 'Authority Percent Credit used units ----------------~---------------------------------- North Dakota 850,000 0.20 9 Ohio 13,440,000 16.95 2,146 Oklqhoma - 4,130,000 54.88 1,033 Oregon 3,370,ooo 9.90 310 Pennsylvania 14,860,OOO 8.90 1,145 Puerto Rico 4,090,000 0.00 0 Rhode Island 1,220,000 0.00 0 South Carolina 4,220,OOO 16.38 477 South Dakota 890,000 20.81 144 Tennessee 6,000,OOO 15.25 758 Texas 20,850,OOO 14.25 2,575 Utah 2,080,OOO 25.09 400 Vermont 680,000 15.13 97 Virgin Islands 140,000 0.00 0 Virginia 7,230,OOO 9.80 712 Washington 5,580,OOO 14.59 365 West Virginia 2,400,OOO 26.77 436 W isconsin 5,980,OOO 21.09 592 Wyoming 630,000 2.24 74 --------------------------------------------------- Total $313,113,750 20.08 34,491 --------------------------------------------------- * Ill-Chicago DCH $7,600,000 not included in state total authority Source : National Council of State Housing Agencies / Urban Institute Low-Income Housing Tax Credit Survey 22 . . ATTACHMENT V ATTACHMENT V . . Tax Credit &olect Synd~catm Funds Flow Chart Tax Credits Issued From U.S. Treasury = $1,000 . Dilferenca Between Government’s Cost of Capital and Investor’s Yield Present Value = $71 2 b $99 Risk Premium 29 5% 01 Capital $182 Used for Attracts Equity Capital = b Transaction Costs $613 [LeftforPro~=*431 I--------; r $680 in Leveraged Financing $1 ,111 in Qualified Expenditure 23
Low-Income Housing Tax Credit Utilization and Syndication
Published by the Government Accountability Office on 1990-04-27.
Below is a raw (and likely hideous) rendition of the original report. (PDF)