Tax Credit Fund Formation

  • Holland & Knight's Tax Credit Transactions Team has extensive experience in fund formation and regularly assists clients in all aspects of tax credit investments.
  • The high volume of deals we handle in the fund formation area keeps us on the cutting edge of the capital markets for tax credit investments.
  • The combination of our experience in advising clients on tax credit investments and structuring investment funds that will attract capital enables us to provide comprehensive, "one-stop shopping" for tax credit industry participants.

Holland & Knight's Tax Credit Transactions Practice represents numerous sponsor firms that specialize in underwriting, acquiring, overseeing and managing investments in low-income housing, historic rehabilitation and renewable energy facilities. We assist these sponsor firms, which act as intermediaries between project developers and equity capital investors, in both forming tax credit funds to raise investment capital and in making investments.

Our team represents many different sponsors and has organized scores of investment funds for them. Some of the investment funds (dedicated funds) are organized for a single investor; others have multiple investors. Some of the funds (specified property funds) invest only in properties that have been identified in advance of the investment fund closing; others (blind pools or partially blind pools) have not identified properties in advance and leave it to the discretion of the sponsor to select properties; still others have not identified all properties in advance and require investments in any properties to be approved by the fund investors.

Between 2000 and 2012, we organized scores of LIHTC investment funds that were "guaranteed," "insured" or otherwise "credit enhanced" that raised over $5 billion in capital from corporate investors. Recent developments in the law have required participants to come up with one or more new deal structures that will both satisfy the law and satisfy the investor's desire for safety of their investments. There is not yet a widely accepted alternative structure, although we have developed a form of credit enhanced LIHTC investment fund that does not involve an actual guaranty.

In addition to the credit enhanced investment funds that we have organized, we also assist clients in the organization and offering of many non-credit enhanced funds. Although some investors participate in both credit enhanced and non-credit enhanced funds, others tend to participate in only one category. By organizing both kinds of funds, we have worked with most of the major investors in the tax credit industry. As a result, we are very aware of, and sensitive to, the needs of investors in both enhanced and non-enhanced funds, and bring this experience to bear when representing investors.

As with other areas of our Tax Credit Transactions Practice, the high volume of deals we handle in the fund formation area keeps us on the cutting edge of the capital markets for tax credit investments. The combination of our experience in advising a wide range of clients on investments in tax credit projects and in structuring investment funds that will attract capital enables us to provide comprehensive, "one-stop shopping" for tax credit industry participants.