Overview
Financing affordable and mixed-income housing projects requires legal complexity not normally found in traditional market real estate deals. Working with federal, state and local entities not only yields much-needed, quality affordable and mixed-income housing, but also presents attractive financing and tax benefits to developers and project owners. Katten's Affordable Housing and Community Development group is made up of experienced practitioners, including pioneers in the industry, who guide owners, developers, equity investors, tax credit syndicators, public and private lenders, quasi-governmental entities and government agencies through the regulatory and financing requirements of affordable and mixed-income housing projects throughout the nation.
Moreover, during times of economic crisis, our attorneys know how to handle workouts and restructurings for troubled affordable housing loans thanks to their deep experience dealing with the complexity of affordable and mixed-income housing and workout-challenged developments during past and current distressed real estate markets.
Innovative structuring
Katten's Affordable Housing and Community Development group comprises real estate and tax attorneys who work jointly to deliver practical solutions to complex problems, whether in the case of new transactions or working out non-performing properties and loans. Our attorneys have a thorough understanding of both the financing available for affordable housing and the maze of regulatory requirements clients must navigate to attain it. Katten attorneys have been instrumental in creating innovative financing structures for affordable housing, workforce housing, mixed-income housing and community development projects, utilizing public-private partnerships, federal and state tax credits (in particular the federal Low-Income Housing Tax Credit (LIHTC), taxable bonds, tax-exempt bonds and private equity. It is this experience and innovation that separate us from our peers. Our breadth of experience includes working on the following transactions:
- In New York City, our real estate and tax attorneys engineered the creation of a number of unique tax structures that began in New York and have since become widespread across the country. One of these formed the basis for the "80/20", “75/25” and other iterations of market and low-income rent, tax-credit syndication structures now standard in the industry. Another, known as the “Sub-50 Tax-Exempt Bond Structure,” is a volume-cap efficient structure, originally utilized by both the New York State Housing Finance Agency and the New York City Housing Development Corporation, and now in use nationwide. Recently, our attorneys assisted a developer in a complex transaction in which the City of New York conveyed the land to the developer and provided significant long-term, subordinated low-interest financing for the development of a mixed-income project. The project comprised three separate condominium units containing more than 1,200 residential units, ancillary parking facilities and a large retail eatery. In this project, 20 percent of the units were affordable rate, 33 percent were market rate and the remaining units were workforce housing. We also represented a developer in refinancing a multifamily development that involved conversion of tax-exempt and taxable publicly held bonds to direct purchase bonds; and represented a developer in a simultaneous closing on three parcels of land and subsequent financing of affordable and market-rate units on the site, including 83 micro-units.
- In California, our attorneys worked closely with an affordable housing developer to create and implement a B-bond program, which enables affordable housing projects to support a larger debt burden than is typical for most projects. This structure has been used on a number of urban infill transactions throughout California, including projects located in Los Angeles, San Jose, Santa Ana, Rohnert Park, Inglewood, Hawthorne, Garden Grove, Gilroy and Oxnard.
- In Illinois, we provided value-added advice to a developer in connection with a mixed-use project anchored by Whole Foods in an area that was previously a food desert on Chicago's South Side. The financing for the project was a true public-private partnership that included a below-market ground lease, federal New Markets Tax Credits, TIF dollars and private equity. We have also worked with several market rate developers to satisfy the requirements imposed by Chicago's affordable housing ordinance.
- In Maryland, we created the first “step-in-shoes” tax-exempt bond-financed conversion of a defaulted residential condominium into an LIHTC affordable housing project. This structure was later utilized in other deals, including a San Francisco step-in-shoes condominium-to-affordable housing project that was named by the Wall Street Journal as “Real Estate Deal of the Week.”*
- Nationwide, we represent developers, investors and lenders in complex transactions, including representation of: (1) an investor in a joint venture to acquire and develop a warehouse/industrial park in Maryland; (2) a developer in an acquisition and financing of a multifamily, public-private partnership with the Plano Housing Authority in Texas; (3) a major US bank in connection with the bankruptcy of Lehman Brothers, to preserve the client's interests in its collateral, which consisted of troubled mortgages in more than 35 properties located throughout the country with an aggregate value of more than $1 billion dollars; and (4) a hedge fund and real estate private equity fund joint venture in connection with the acquisition of general partner interests in 50 LIHTC projects throughout the Midwest and West.
Our attorneys have a broad base of experience working with the Department of Housing and Urban Development (HUD) and have a deep understanding of many HUD and government-sponsored enterprise (GSE) programs that generate (or help preserve) affordable and mixed-income housing units throughout the country. Our attorneys have represented owners, lenders and bond issuers in connection with defaulted HUD, Fannie Mae and Freddie Mac insured loans and have collaborated with our Insolvency and Restructuring practice to restructure defaulted, tax exempt, bond funded, HUD insured loans through the issuance of refunding bonds.
National reach
Recognized as the 2022 “Law Firm of the Year” in Real Estate Law by U.S. News, our approximately 100-attorney real estate department is well-represented in every major US property market – and our day-to-day collaboration transcends geography, as our attorneys routinely work with colleagues in offices throughout the country. This national platform ensures that the experience from one market can be readily leveraged and applied to other markets. Wherever affordable housing becomes a viable option, anywhere in the US, we have the know-how and experience to steer clients through the regulatory complexities and financing obstacles to close the deal or to restructure a troubled deal.
We are experienced in all aspects of affordable and mixed-income/mixed-use housing and community development transactions, including:
- Low-Income Housing Tax Credits
- Opportunity zones
- Workforce housing
- Mixed-income and mixed-use developments/public-private partnerships
- Public finance — tax-exempt bonds
- FHA-insured and GSE mortgage programs
- Federal, state and local government housing assistance and grant programs
- Projects receiving Section 8 housing assistance payments
- Rental Assistance Demonstration (RAD) program development
- Quasi-governmental financing programs
- Corporate, tax and business entity structuring
- New Market Tax Credits (NMTC)
- Historic Tax Credits (HTC)
"Their knowledge and ability to manage through the process is very helpful and they are typically able to do the work at a cost that is far less than some of the larger firms."
U.S. News – Best Lawyers® 2019 "Best Law Firms"
(Real Estate Law) survey response
Experience
Insights
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Event | March 15, 2023
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Publication | February 13, 2023
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Event | January 12, 2023
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News | December 22, 2022
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Event | November 10, 2022