Financing the Deal: A Banker's Perspective

Springfield HTC Workshop May 6, 2011 Jackie R. Winchester Vice President – Community Development Advisor PNC Community Development Banking (614) 463-8109 [email_address]

Banking Perspective of Historic Tax Credits ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Project Structure/What the Developer Needs ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Evaluation Process/Determining Feasibility ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Evaluation Process/Determining Feasibility (Cont.) ,[object Object],[object Object],[object Object],[object Object],[object Object]

Calculating the Historic Preservation Tax Credit ,[object Object],[object Object],[object Object]

Calculating the Historic Preservation Tax Credit ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],General Examples of Acceptable and Unacceptable Cost for Historic Basis Purposes

Pricing of Historic Tax Credits ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],Example: $1 million in Qualified Rehabilitation Expenditures X 20% = Your Credit or $200,000. NCCDC with a 99% partnership interest as a limited partner will receive $198,000 in credits. The market is approximately 85 - 95 cents of the dollar. At 90 cents the GP will receive $178,200 for the credits. State Credit Calculation: $250,000 x 99% = $247,500 x $.60 = $148,500. Total investment for Federal and State: $326,700.

Syndication Structuring ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],Developer owns 1% Investor owns 99% Pass-through Entity owns Land and Buildings

Guarantee Requirements ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

New Markets Tax Credits Fundamentals NMTC Synopsis A federal tax credit available to those that provide equity to certain certified entities that in turn lend or invest in businesses (including non-profits) located in low-income communities.

New Markets Tax Credits How They Work QALICB* CDE CDFI Investor Allocation Qualified Equity Investment Repayments * Qualified Low Income Community Businesses ** Qualified Low income Community Investments QLICIs ** Tax Credits & Return

New Markets Tax Credits ,[object Object],[object Object],[object Object],[object Object],[object Object],When is Rehabilitating Real Estate Qualified?

New Markets Tax Credits ,[object Object],[object Object],[object Object],[object Object],[object Object],Recapture

Tax Issues ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Due Diligence Items/Checklist ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Common Pitfalls for First-Time Users of the Federal Historic Tax Credits ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Financing the Deal: A Banker's Perspective

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Financing the Deal: A Banker's Perspective