Fourteen Things We

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• Fourteen Things We
• Learned Today
• Forrest Milder
• 617-345-1055

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1. The Rehabilitation must be consistent with the
   reason for the certification. Restoring the
   building to how it looked in 1850 wont work in
   an Art deco district.
2. Get to the SHPO and the Parks Service early. If
   you demolish something that they think matters,
   you may have committed a terminal mistake

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• The 24-month period is only a test. Qualified
  rehabilitation expenditures, eligible for the
  credit, are computed over a longer period.
• The credit is available when the building is
  placed in service. So, be sure to get the
  investor in on time.

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• Only rehabilitation expenditures count, not site
  improvements and enlargements. This is different
  from the LIHTC
• Most investors expect to use the
  lease-pass-through or master lease or
  sandwich lease structure. This makes the
  transaction a LOT more complicated. The HTC
  reduces basis which can affect LIHTCs and NMTCs.

5

• Balance the 5-year need to stay in the project
  (due to recapture) with the concept of puts and
  calls to assure that the investor leaves. (The
  investor wants the loss anyway).
• When is a dollar more than a dollar? Investors
  consider risk of construction and recapture, the
  size of the deal, whether they pay for the
  credits as they vest.

6

1. Get the lender on board. Security and
   non-disturbance agreements can be important.
2. State Tax Credits are a hot area for the IRS,
   which seems to think that they are always sold,
   so that someone has taxable income from the
   investment.

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1. NMTC investor worries about having to reinvest if
   the transaction goes bad.
2. The Parks Department is considering the
   standards, and may make them easier before the
   end of the year
3. Transactions involving two credits (or more!) are
   VERY complex

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1. If you are going to do a post-1950s rehab, it
   really helps if the architect who did the
   building is dead