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Presenters
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Melanie Clark
Partner (801) 578-6904
melanie.clark@stoel.com
Structuring Your Deal Now to Plan for the Exit 15 Years Later - - PowerPoint PPT Presentation
Structuring Your Deal Now to Plan for the Exit 15 Years Later - - PowerPoint PPT Presentation
Structuring Your Deal Now to Plan for the Exit 15 Years Later Melanie Clark, Sallie Lin, Kate Mathews Utah Housing Matters Conference September 1, 2020 Presenters z Melanie Clark Partner (801) 578-6904 melanie.clark@stoel.com 2
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Presenters
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Sallie Lin
Attorney (206) 386-7572
sallie.lin@stoel.com
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Presenters
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Kate Mathews
Attorney (206) 386-7519
kate.mathews@stoel.com
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Background of Year 15 Exit
- Tax Credit Compliance Period
- Accelerated during the first 10 years
- 15-year compliance period
- Extended Compliance Period
- Why do you want your Investor out?
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- Code Requirements under Section 42(i)(7)
- “Debt Plus Taxes”
- Qualified Nonprofit Organization
- State Law Requirements for ROFR
- Seller decides to sell
- Seller receives a bona fide offer to purchase
from a third party, which offer seller is willing to accept
Right of First Refusal
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- Buy the real property
- Buy the investor’s interest in the entity
- Appraisal considerations
- Appraiser considerations
Option Agreement
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- Investor may not be the same at the end of the
compliance period.
- New investor needs to:
- Agree to be bound by the terms of the
partnership agreement
- Agree to any prior accounting
- Old investor needs to release general partner
from any prior claims
Change in Investor
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- Investor can give up certain consent rights
- Refinancing
- Property manager
- Accountants
- Use of reserves
- Removal rights terminate
- Approval of sales – create parameters
No Investor Exit
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- Refinancing of the project
- No need for investor approval if obtaining a loan in order to
buy-out the investor
- Change in property manager
- Change in depreciation or other measures to slow down
losses
- Fiduciary duties
- Early Exit
- Recapture Bond
- Consents cannot be unreasonably withheld, conditioned or
delayed
- Change in investor partner
Other Provisions to Consider
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- Background on Qualified Contract
- 42(h)(6)(E)(i)(II) – affordability requirement during
extended use period terminates if owner exercises “qualified contract” option.
- State Housing Agency must advertise QC
requests for one year (Year 15)
- This can be used to convert the project to a market
rate project
- Waive the qualified contract in Low-Income Housing
Credit Commitment Agreement and Declaration of Restrictive Covenants
Qualified Contract
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- Please contact us if you have questions:
- Melanie Clark – melanie.clark@stoel.com
- Sallie Lin – sallie.lin@stoel.com
- Kate Mathews – kate.mathews@stoel.com
- www.stoel.com
Questions?
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