Dia:Beacon A Case Study of Tax Credits & the Arts Steven Evans, Dia Art Foundation Al Shehadi, National Trust Community Investment Corp June 24, 2009.

Slides:

Advertisements

Similar presentations

1 US Bancorp Community Development Corporation Historic and New Markets Tax Credits for the Armory: Investor Reflections (or lack thereof) Robert Wasserman.

Advertisements

How Credits Become Capital: When and How to Syndicate Incentives for Historic Preservation in Detroit Thursday, June 5, 2008 The Detroit Athletic Club.

Historic Tax Credit Equity Syndication Basics Historic Tax Credit Developers Conference Thursday, February 5, 2009 Miami Beach, Florida.

Syndication Leasing Structures How Tax Credits Become Capital: When and How to Syndicate Panel USING HISTORIC TAX CREDITS IN NEW YORK June 24, 2009.

Virginia Housing Coalition 2013 Housing Credit Conference Deal Structuring, Fundamentals, and Financing and Legal Issues.

McGraw-Hill/Irwin ©2008 The McGraw-Hill Companies, All Rights Reserved CHAPTER16CHAPTER16 CHAPTER16CHAPTER16 Financing Project Development.

Chapter 2 Principles of Accounting and Financial Reporting for State and Local Governments McGraw-Hill/Irwin Copyright © 2013 by The McGraw-Hill Companies,

HUD 202 Recapitalization Utilizing Tax Exempt Bonds and Tax Credits to Meet Your Financing Needs.

0 STATE OF CALIFORNIA GENERAL OBLIGATION BOND PROGRAM UPDATE ASSOCIATION OF CALIFORNIA CONSTRUCTION MANAGERS CONFERENCE MAY 20, 2009.

Tax Credit Basics Nebraska Investment Finance Authority.

1. Is a challenging task Requires a great amount of work and time Involves numerous steps, which include*: 2 – write a business plan – obtain business.

National Development Council 1 Hypothetical Investment – Detailed Breakdown.

HR A 1 © Copyright 2004 The Trust for Public Land.

Nebraska Investment Finance Authority © 2007 Tax Credit Basics.

SBA 504 Loan Program Financing Green Energy Projects for Hawaii’s Businesses PRESENTS Rebuilt Hawaii Consortium - April 5, 2011.

National Development Council 1 NMTC Deal Structuring Key Considerations.

How to make 4% LIHTC deal work: Case Study from Fairfax County Presented by: Aseem Nigam, Director, Real Estate Finance & Grants Management Division, Fairfax.

WHAT IS ACCOUNTING? Accounting is the identifying, recording and communication of financial events that affect a company.

Fund Accounting Jim Corkill Accounting Services & Controls November 2011.

National Development Council 1 QLICI – Investment to Project.

Basic Investment Structure

Affordable Housing Preservation Summit An Overview of Financing and Servicing Options. Wells Fargo Bank Reine Yazbeck.

U.S. Dept. of Agriculture Rural Development 538 Program Offering Financial Advice and Solutions to Health Care, Senior Living, and Housing Providers. Brian.

How to Finance Affordable Housing with Low Income Housing Tax Credits July 10, 2007.

Housing Assistance Council Building Rural Communities since 1971 Southeast Regional Mutual Self-Help Housing Conference “Other Funding Sources” Wednesday,

Innovation Strategies Presented to MODE January 2014.

Welcome to the Board! (and did we mention your Fiduciary Responsibility?)

Confidential # v1 Issues in Real Estate Transactions Involving Affordable Rental Housing For Urban Re-Development Stephanie M. M. Smith 500.

Citi REO Strategy & Community Relations September 15, 2009.

© OECD A joint initiative of the OECD and the European Union, principally financed by the EU Steven P Janes Sherrards Solicitors London UK CASE STUDIES:

State Financing Programs for Brownfield Redevelopment.

Chapter Treasurer Orientation April 23, Chapter Treasurer Responsibilities Maintain the chapter’s financial records Provide the President and Board.

Year 15: Preservation and Beyond Presented at the 2013 Virginia Housing Credit Conference.

ON TARGET New Start Community Development. ON TARGET.

National Development Council 1 QEI – Investment to CDE.

1 Indiana Statewide Certified Development Corporation Jean Wojtowicz Executive Director.

Part 4 PowerPoint Presentation by Charlie Cook Copyright © 2003 South-Western College Publishing. All rights reserved. All rights reserved. Finding Sources.

Govt. Reporting - 1 GOVERNMENTAL REPORTING City Council Budgetary Hearing.

How Credits Become Capital: When and How to Syndication Incentives for Historic Preservation in Seattle Conference Thursday, July 12 Seattle, WA.

Financial Statements and Business Decisions Chapter 1 McGraw-Hill/Irwin © 2009 The McGraw-Hill Companies, Inc.

Best Practices: Financial Resource Management February 2011.

IPED Historic Tax Credits For Developers. Artspace Was founded in 1979 as an advocate for the space needs of artists in Minneapolis’ historic Warehouse.

Chapter Seventeen Accounting for State and Local Governments, Part II McGraw-Hill/Irwin Copyright © 2013 by The McGraw-Hill Companies, Inc. All rights.

Acquisition / Rehabilitation Credits. Basics To be eligible, an existing building must be purchased with adherence to the related party and 10 year rules.

Shelters CAN become Landlords… But it isn’t EASY!! Presenters: Deb Chausse, Executive Director Jennifer Sharkey, Assistant Director, Business and Development.

Fund Accounting Jim Corkill Business & Financial Services November 2014.

Overview of the Housing Tax Credit Program 2015 Nebraska NAHRO Conference.

1 George Mensah Director of Community & Economic Development Dept City of Miami Working with your developer.

Nebraska Investment Finance Authority © 2005 Tax Credit Basics.

Chapter © 2010 South-Western, Cengage Learning Buying a Home Why Buy a Home? The Home-Buying Process 22.

3.1 SOURCES OF FINANCE Unit 3 – Accounts & Finance.

SBA 504 Loan Program Long Term Fixed Asset Financing For Small Businesses.

Frequently Asked Questions Low Income Housing Tax Credits and Public Housing Cambridge Housing Authority.

Asset Management’s Seat at the Table or Creating an Asset Management Organizational Culture Presented by: Molly Rogers Director of Asset Management May.

Historic Preservation Tax Credits The Next Level: “Master Tenant” Syndication.

Wyoming Community Development Authority Financing Affordable Housing in Wyoming Housing Trust Fund (HTF) Public Hearing June 9, 2016 State of Wyoming Citizen.

T E F R A H E A R I N G T E F R A H E A R I N G CITY OF STOCKTON TAX-EXEMPT CERTIFICATES OF PARTICIPATION SERIES 2003 (UNITED CHRISTIAN SCHOOLS) Presented.

1 Fund AccountingNovember 17, 2015 Fund Accounting Jim Corkill | Controller Business and Financial Services Controller’s Office.

The Benefits of Tax Credits and How They Work July 6, 2016 Midwest Lenders LIHTC Workshop.

Government and Non-Profit Accounting

Financing Project Development

Multifamily Partnership Opportunities Annual Conference of the

Tax credit transactions

The Development Team Texas Rural Rental Housing Preservation Academy Session #4 June 6 – Start w/ brief overview of Greystone – who we are and what.

Successful efforts need coordinated and cooperative stakeholders

Getting the Most Out of Alternative Financing Sources

Combining Historic Tax Credits and New Markets Tax Credits

City Council Concord Senior Housing 275 E. Cordova Street

Governmental Accounting Finance Budget “101”

Presentation transcript:

Dia:Beacon A Case Study of Tax Credits & the Arts Steven Evans, Dia Art Foundation Al Shehadi, National Trust Community Investment Corp June 24, 2009

Dia: Beacon - Before

Underwriting Issues Developer capacity Financing Coordination of multiple funding sources Construction oversight Property tax exemption Developer fees

Developer Capacity Organizational Capacity  Staff  Board  Financial  Consultants Functional Capacity  Legal/Real Estate  Construction oversight  Internal controls & reporting

Developer Capacity: Dia Organizational Capacity  Experienced construction & financial management staff  Hired outside construction manager  Sophisticated fundraising board  Large endowment/strong balance sheet Functional Capacity  Legal/Real Estate  Construction management staff on-site at all times  Strong internal controls & experience with grants reporting

Funding Sources Arts & cultural facilities are not “profitable” Development costs funded largely with “free” money  Private fundraising  Public grants  Tax credit equity Funds should be available during construction  Closed or committed at start of construction?  Funds available up-front?  Benchmark-based pay-ins?  Fundraising “pledges” over time?  Cash flow projections & need for bridge financing

Funding Sources: Dia $25.6 mmFundraising $2,100,000Empire State Dev Corp $ 250,000Dutchess County IDA $ 250,000City of Beacon $ 125,000NYS OPR & HP $ 85,000NYS Council on the Arts $5.96 mmHTC & NMTC Equity from BoA & NTCIC

Funding Sources: Dia Historic Tax Credit Issues Site remediation Permanent art installation Buyout reserve NMTC Issues 1 st QEI recorded Enhanced only HTC equity (a “simple” structure) NMTC equity funded a generous operating reserve

Coordinating Funding Sources “Free” money comes with strings  Use restrictions  Lien or deed to enforce  Performance requirements  Compliance & reporting requirements? Understand restrictions & requirements of each funding source Requirements can conflict: be prepared to negotiate Properly budget resources to be able to meet compliance and reporting requirements

Construction Oversight Typical construction oversight functions  Pre-closing “constructability” review  Monthly site visits & reports  Review and approve draw requests  Check title/liens  Disburse funds Need 3 rd party to perform oversight role  Public agency  Bridge lender (equity; pledges)  Consultant hired by investor Dia construction oversight  NTCIC hired a construction consultant to perform construction oversight

Property Tax Exemption Nonprofit organizations are typically exempt from local property taxes Does property tax exemption extend to taxable entities controlled by nonprofits? Beacon tax exemption did not extend to taxable entity created by Dia to syndicate tax credits Solution : Complicated, long-term ground lease where Dia retained ownership of land for local property tax purposes but taxable entity owned the “improvements” for federal tax credit purposes

Development Fee Development fee  Increases HTC basis and equity  Pays nonprofit for staff and time invested to develop project  Deferred portion of fee ensures “excess” cash flow goes to nonprofit and not tax credit investor  Property needs to be owned by taxable entity Nonprofits can earn a development fee for undertaking a tax credit transaction.

Development Fee: Dia Dia retained direct ownership of project until syndication (approximately 75% complete) Could only earn development fee on work done after property transferred to LLC Had to forego development fee on work completed prior to syndication

Al Shehadi Acquisitions Manager National Trust Community Investment Corp 27 Byram Shore Road Greenwich, CT (203) Steven Evans Assistant Director for Beacon Dia Art Foundation 3 Beekman Street Beacon, NY (845)