Holland & Knight's Tax Credit Fund Formation lawyers serve as counsel to both syndicator and investor clients in putting together funds for tax credit projects. We represent sponsor investment firms that underwrite, acquire, oversee and manage investments in all types of projects that are supported by federal and state tax credits. Our attorneys guide clients in forming tax credit funds to raise investment capital and in making those investments, including low-income housing, historic rehabilitation, New Markets and renewable energy projects.
We represent funds with a variety of structures and investment objectives, and have organized dedicated funds for proprietary investors and multiple investors. Our extensive experience forming tax credit funds includes specified property funds that identify investment targets in advance of the fund closing, as well as blind pools or partially blind pools that leave it to the discretion of the sponsor to select investment properties. Our substantial knowledge of all aspects of tax credits and other financing gives us the experience to help funds take a creative approach to structuring investments to fit the needs of sponsors and investors.
We also advise on management, operation and governance issues; prepare offering materials and documentation; and assist low-income housing tax credit (LIHTC) funds on the implementation of exit strategies in compliance with Section 42 of the Internal Revenue Code.
Our familiarity with both credit-enhanced and noncredit-enhanced funds has provided us with a broad perspective on tax credits, and we have worked with most of the major investors in the industry. As a result, we often are able to suggest creative solutions and draw on the experience that we have earned in structuring scores of such transactions.
Our long involvement in tax credit fund formation informs our counsel to clients. We interact continually with all the players in tax credit fund formation, and knowing their concerns allows us to anticipate issues and put together deals efficiently. We have worked with financial institutions, insurance companies, technology companies, syndicators and investment advisers in every investment environment. These funds, like all investment vehicles, continually adjust to economic trends and market conditions, as well as regulatory changes. Our day-to-day involvement with tax credit funds since these programs were established means that we are always positioned to give strategic advice to clients. We also monitor the regulatory and legislative arenas so that we can advise clients on how tax reform under consideration in Congress may affect these funds, which we expect to remain a viable investment opportunity.
Financial institution investors have found that participation in LIHTC funds can be an important part of their strategy for compliance with the Community Reinvestment Act (CRA). We show bank investors how investing in funds that are structured to leverage low-income housing credits can help them meet their CRA ratings goals while also earning attractive returns on investments. Although there are many ways for banks to structure LIHTC funds, including direct investments, many find that participation in pooled investment funds allows them to spread the benefit of the investment while achieving financial diversification.
CRA investments often are tailored to local needs, and we help clients form structures that address objectives within their regulatory footprint. For example, banks may pair investment in a fund with a direct investment in a project, with both investments receiving the benefit of LIHTC while the fund sponsor takes on the responsibility of monitoring compliance and asset management.
On the other side of these transactions, we guide clients in structuring funds that have a CRA emphasis or CRA-motivated investors, and we address the specific regulatory needs of those investors so that the funds achieve the goal of earning compliance ratings.
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