Joint Ventures Involving Tax-Exempt Organizations, 4th Edition

CHAPTER 13Low-Income Housing, New Markets, Rehabilitation, and Other Tax Credit Programs

1. § 13.2 Nonprofit-Sponsored LIHTC Project
2. § 13.3 Low-Income Housing Tax Credit (Revised)
3. § 13.4 Historic Investment Tax Credit
4. § 13.6 New Markets Tax Credits (Revised)
5. § 13.10 The Energy Tax Credits
6. § 13.11 The Opportunity Zone Funds: New Section 1400Z-1 and Section 1400Z-2431 (Revised)
7. Appendix 13B

§ 13.2 NONPROFIT-SPONSORED LIHTC PROJECT

p. 944. Insert the following before the first full paragraph of this section:

Some nonprofits that have engaged in LIHTC transactions have asserted somewhat aggressive positions that attempt to, in effect, compel renegotiation of their financial upside in transactions that have closed years before. One scenario occurs where a nonprofit that agreed to a certain financial split with its for-profit partner(s) when entering into a transaction years later asserted that honoring it would provide an undue benefit (“impermissible private benefit”) for the for-profit developer.

Ironically, the nonprofit would be taking the contrary position that it would take if the IRS raised the private benefit issue on audit and by litigating the issue, the nonprofit lays out the IRS's argument in publicly available documents.

Another situation involves LIHTC deals coming to the end of the compliance periods, where nonprofits assert Code § 42(i)(7) rights as to first refusal to purchase below fair market value.^4.1 One case in Massachusetts has been litigated. See Homeowner's ...