Tax-Exempt Bond Basics

Wednesday, October 3, 2018 - 9:00am to 3:00pm

Cost with conference registration: $450
Workshop only: $550


9-9:50 a.m.

Volume Cap, Private Activity Bond Overview

  • Public bonds vs. private bonds
  • State private activity bond volume cap and IRS Publication 4078
  • CDFA Annual Volume Cap Report
9:50-10 a.m.Break
10-10:55 a.m.

Four Percent Low-Income Housing Tax Credit Overview

  • Four percent vs. nine percent credits
  • New construction vs. acquisition/rehabilitation
  • Tax credit calculation; eligible basis, applicable fraction, qualified basis, tax credit percentage, annual credits, difficult development areas and qualified census tracts
10:55-11:05 a.m.Break
11:05 a.m.-NoonAdditional Rehabilitation Considerations
  • Minimum rehabilitation expenditures
  • Allocation of acquisition costs between land and depreciable assets
  • Rehab completion date and the appropriate tax credit percentage

Players in a Bond Transaction

  • Bond application, inducement resolution, TEFRA requirement, other documents
  • Borrower, issuer, credit enhancer, bondholders, underwriter, trustee, lender, contractor and other service providers
  • Rehab completion date and the appropriate tax credit percentage
  • Direct vs. public bond issues; draw-down bonds vs. bonds in which all proceeds are available up front
Noon-1 p.m.Lunch
1-1:50 p.m.Tax Credit Equity
  • Credit pricing, bond proceeds, conventional debt, deferred developer fee, soft money

Bond Financing and Development Timeline

  • In-depth look at bond financing period
  • Example equity contribution schedule
  • Financing sources by month from closing through construction (or rehab) completion to stabilization and conversion
1:50-2 p.m.Break
2-3 p.m.

The 50 Percent Test

  • Aggregate basis, consequences of failing the test, remedies, timing of paying off the bonds
  • Common pitfalls, combining with historic tax credits, multibuilding considerations

Major Bond Rules

  • 2% cost of issuance limitation and the 25% land financing threshold
  • 95% qualified costs test

Bond Rules vs. LIHTC Rules

  • Penalty for noncompliance, reviewing agencies, tax forms
  • Minimum set-aside (including income averaging), rent limits