Practices: Municipal Bonds / Public Finance

As a complement to our affordable housing finance practice, the firm has an active multi-family housing bond practice. Our bond lawyers serve as bond counsel and borrower’s counsel for many multi-family housing bond deals. This experience includes developer driven transactions for apartment projects, as well as transactions driven by local housing authorities. Often these transactions involve funding from a variety of sources, including bonds, federal, state, and local governmental grants, and equity raised with 4% federal low income housing tax credits. For example, the bond attorneys at Howell Linkous & Nettles have served as bond counsel and borrower’s counsel in the two largest HOPE VI revitalization projects funded with bonds in South Carolina. These projects, directed by local housing authorities, replaced traditional public housing projects with mixed use communities, including both affordable housing and market rate units.

Tax exempt bonds for these programs can be issued by either the local authority or the State authority: we have experience with both structures. In addition, we have served as bond counsel and borrower’s counsel for more typically structured apartment projects that include a set-aside affordable component, thereby qualifying for low interest bond financing. Acquisition and rehab 4% tax credits may also be available to raise equity funds in these types of deals.

On the other hand, Howell Linkous & Nettles has served as bond counsel for some of the more innovative housing finance structures seen in the market.

In 2007, we were bond counsel for a pooled bond transaction that financed the simultaneous acquisition and subsequent rehabilitation by our client of 23 different multifamily affordable housing projects located in 15 different counties in South Carolina (a total of 830 affordable housing units). The properties had been originally financed with USDA RD 515 loans some 15 to 20 years prior, and were in desperate need of rehabilitation like thousands of similar properties nationwide. For many reasons, the obstacles to a successful transaction seemed insurmountable. With the help of the South Carolina State Housing Finance and Development Authority, USDA RD, and a dedicated working group, we designed a transaction structure that accomplished the goal by pooling the financing, and therefore spreading the transaction costs over the many projects, and which raised 4% LIHTC Tax Credits, commercial bank construction financing, and permanent financing that was provided by USDA RD. Since closing, this transaction has won two national awards for innovative financing, including an award to the South Carolina State Housing Finance and Development Authority, the issuer of the bonds, by the National Council of State Housing Agencies, and another award by the Novogradac Journal of Tax Credit Housing (See the attached press releases).

Building on this success, in 2009 we served as bond counsel and developer’s counsel in a second transaction, based on a similar but slightly different model, in which our client simultaneously acquired and will rehab 45 different multifamily affordable housing projects located in 23 different counties in South Carolina (a total of 1,547 affordable housing units). More recently, we served as developer’s counsel in a third transaction in which bond financing by the North Carolina Housing Finance Agency provided funding for the acquisition and rehabilitation of eight different multifamily affordable housing projects in North Carolina (a total of 246 affordable housing units). This innovative model is now being to put to use on similar transactions of varying sizes throughout the Southeast.

If bonds are a smart component for your multi-family housing development, the bond lawyers at Howell Linkous & Nettles can provide the experienced guidance the development team needs to obtain the optimum result for the deal.