Transcript Taxable Tales Strategies for Mixed Financing David Danenfelzer Texas State Affordable Housing Corporation *

Taxable Tales
Strategies for Mixed Financing
David Danenfelzer
Texas State Affordable Housing Corporation
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Taxable Tales
•Cinderella and her Bonds
•The Sacrifice of the Cap
•The Tale of Taxable Tails
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Cinderella and her Bonds
Case Study:
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Pool transaction needed to close within specific time
frame but not enough volume cap.
In order to meet closing deadline issue 50% of debt
as TEB in order to access 4% HTC.
Taxable debt issued for short term, and swapped for
TEB once additional cap becomes available.
Difficult execution, Higher cost of Issuance, but bond
purchaser can maximize size of pool under one
indenture.
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The Sacrifice of the Cap
Case Study:
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Pool transaction that needs high equity, and low debt.
Issuance of A-bonds in two tranches, one long-term,
one short-term.
Short-term A bonds used for rehab then refunded
using other equity-like source of funding.
Need acceptance of transaction from state regulatory
agency, short-term bond buyer, and source of soft
subordinate "equity".
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The Tale of Taxable Tails
Case Study:
• Need for taxable debt for ineligible costs, or additional
soft subordinate debt.
• higher interest rates for subordinate debt draws in
high-risk buyers.
• Need to gain acceptance from bond counsel, need
flexible underwriting and willing subordinate lenders.
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