Tax Credit Finance

Practice Contacts

Tax Credit Finance

Navigating federal and state tax credits for individual and project funding is a complex and time consuming endeavor, but Taft attorneys are here to simplify the process. Our extensive knowledge and experience across the spectrum of tax credits helps clients identify tax credit opportunities and design ways to utilize or monetize tax credits generated by their projects.

Taft attorneys guide clients through every step of the process of obtaining tax and monetizing credits from initial eligibility assessment through closing. We represent sponsors, developers, tax equity investors, and operating businesses across various industries and capitalizations, ensuring comprehensive support for all types of tax credit transactions. We advise on a comprehensive range of both federal and state tax credit programs, including the following areas:

New Markets Tax Credits

Taft’s Tax Credit Finance team has extensive experience in all aspects of New Markets Tax Credit (NMTC) transactions. Our attorneys have represented Developers, CDE’s, and lenders in hundreds of millions of dollars of projects nationwide. Our team has been immersed in the NMTC industry since its inception and has a deep understanding of not only the technical and legal aspects of the NMTC program, but also the business of being in the NMTC industry.

Our NMTC financings often include a wide variety of sources, including developer equity, loan proceeds, grants, bond proceeds, state tax credits, and a variety of other “soft” or “non-traditional” sources, each being provided by different parties with their own needs, risks, and restrictions. Our Tax Credit Finance team has closed transactions with dozens of CDEs, NMTC Investors, and lenders, and we are well versed in the considerations affecting each party to the NMTC transaction.

Renewable Energy Tax Credits

Our attorneys offer the full suite of legal services for renewable energy tax credit transactions. We have worked with sponsors, developers, tax credit investors (including both banks and widely held corporations), and tax equity syndicators to facilitate the utilization or monetization of tax credits through traditional tax equity financing, tax credit transfers pursuant to Section 6418 of the Code, and ‘direct pay’ transactions under Section 6417 of the Code. In collaboration with our Energy practice and Transactional Risk Practice, where we help underwriters place tax insurance products insuring the monetization of renewable energy tax credits, we assess renewable energy tax credit transactions across various sectors, including solar, wind, biogas, battery energy storage, fuel cell property, carbon sequestration and more.

LIHTC and Related Affordable Housing Incentives

Taft’s Tax Credit Finance team is well suited to serve as tax credit and bond counsel for any LIHTC financing. Our housing finance attorneys have tremendous experience encompassing tax credit and bond counsel services necessary to complete affordable housing transactions. We regularly close transactions using 4% LIHTC combined with tax-exempt bonds, including transactions involving privately placed bonds, publicly offered bonds, and short term cash-collateralized bond structures that take advantage of HUD 221(d)(4) and 223(f) permanent financing, as well as Freddie TEL and Freddie Forward.

Taft has also served as bond counsel to numerous public housing authorities in connection with converting existing public housing facilities to LIHTC properties using HUD’s RAD program. Among our RAD conversions are transactions using tax-exempt seller notes to provide additional credit toward meeting the 50% test for tax exempt bond financing, which is a requirement for using LIHTC without resulting in a charge against the state volume cap.

Our affordable housing transactions routinely use sources derived from HOME, AHP (Federal Home Loan Bank), CDBG, ARPA, TIF and other subordinate and “soft” sources. Taft also has experience with “twinning” LIHTC transactions using the federal Historic Rehabilitation Tax Credit, and various state tax credits to maximize subsidies available and avoid incompatibility between tax programs.

We understand the business of affordable housing beyond the tax credits. We represent private for profit and nonprofit developers, public housing authorities, tax credit investors and underwriters occupying every seat at the affordable housing transaction table.

Related Practices

Notable Matters

New Market Tax Credits (NMTC)

Undertook the joint representation of a statewide Community Development Entity (CDE) and a national CDE in structuring, documenting, and closing the first-ever leveraging of the Indiana Industrial Recovery Tax Credit (DINO) through the New Markets Tax Credit (NMTC) structure, resulting in an $18 million redevelopment of an abandoned rail facility into a state-of-the-art railcar repair facility in rural Indiana.
Represented a developer in connection with acquiring and redeveloping an existing inner city building for a $16 million mixed-use retail, office, and residential development with financing partially obtained through a New Market Tax Credit (NMTC) loan and federal and state historic tax credits.
Represented Guam Community Development Entity in connection with financing a charter school in Guam using a combination of New Market Tax Credits (NMTC) and HUD 108 financing.
Represented a Community Development Entity (CDE) in successfully obtaining a $50 million allocation of New Markets Tax Credits (NMTC) for use in rural projects in Southern Indiana, as well as a second $45 million allocation and a third $15 million allocation, also for use in rural projects throughout the State of Indiana.
Represented a manufacturing company in a $10 million New Markets Tax Credit (NMTC) financing of a new production line in upstate New York.
Represented a Community Development Entity (CDE) in structuring and closing a $40 million mixed-use facility in Louisville, Kentucky, which was financed with a combination of New Markets Tax Credit (NMTC) equity from three local and national CDEs, Recovery Zone Facility Bonds, and private bridge equity.

Renewable Energy Tax Credits

Section 48 (Tax Equity) Represented tax equity investor monetizing approximately $250 million of investment tax credits and other tax benefits arising from multiple utility scale solar and battery energy storage projects in Texas.
Section 30C, 45X Advised sponsor with respect to all elements of tax credit financing the development of a solar panel production facility, residential grade battery storage production facility, and an EV vehicle charger facility.
Section 48 (Section 6418 Transfer) Represented developer in the sale of approximately $60 million in investment tax credits arising from dozens of distributed generation solar photovoltaic systems in one of the nation’s first portfolio sale transactions pursuant to Section 6418.
Section 48 (Direct Pay) Advised nonprofit client on obtaining energy tax credits for a rooftop/carport solar project and monetizing credits via the Code Section 6417 “direct pay” option.
Tax Insurance Represented tax insurance underwriters offering tax insurance on dozens of renewable energy tax insurance transactions amount to hundreds of millions of Dollars of tax insurance placed. Our work has spanned across virtually every form of renewable energy investment tax credit and production tax credit, including Section 30C, 30D, 45, 45Q, 45X, 45Z, 48, 48C, and 48E, every common tax monetization structure, and a wide variety of renewable energy generation facilities, energy storage systems, and manufacturing production facilities.

Low-Income Housing Tax Credits (LIHTC)

Representation of developers of multi-family housing, hotels, and operating businesses in the pharmaceutical and food product industries to structure qualified opportunity zone investments.
Represented tax credit investor in CReED tax credit financing for mixed-use facility.
Acquisition of “pay as you go” tax increment financing for national affordable housing developer for a Rock Island County, Illinois project.
Acquisition of “pay as you go” tax increment financing from a municipality and pledge of note as security for Public Finance Authority (PFA) tax-exempt bond financing on behalf of the developer for an industrial project located in Kane County, Illinois.

Historic Rehabilitation Tax Credits (HRTC)

Structured, negotiated, documented, and closed a $9.4 million “twin” New Markets Tax Credit (NMTC) and Historic Rehabilitation Tax Credit (HRTC) “combined” financing of mixed-use facilities for two separate borrowers in two separate towns.
Served as tax credit equity investor’s counsel for lower-tier investments for more than 125 affordable housing tax credit and historic rehabilitation tax credit projects.