Borrowing Against Staged Tax Credit Equity Payments in the Capital Markets

Abstract

Opportunities to maximize the value of low income housing tax credit-based equity for apartment development by borrowing against investor payment obligations in tax-exempt capital markets have to date been largely ignored or inefficiently pursued. This article identifies how such bond issues may be structured without external credit enhancement to permit them to be rate and marketed broadly to all buyers of tax-exempt debt. The result is substantial increases in developer proceeds from the syndication of tax credit-based project ownership interests.