Mark Stivers, Executive Director of the California Tax Credit Allocation Committee, answered a series of frequently asked questions related to transfer events.
His notice answers the following questions:
- If a project is subject to the Capital Needs Covenant requirement and the sponsor
intends to apply for resyndication within the near future, can the sponsor forgo the Capital
Needs Covenant and just address the Short Term Work reserve requirement at resyndication? - If a project is not subject to an existing Capital Needs Covenant, and the transfer associated with a resyndication will not distribute Net Project Equity to parties, must the underwriting for the project include a capitalized replacement reserve in an amount equal to the costs of any Short Term Work identified in the capital needs assessment pursuant to Section 10320(b)(4)(A)?
- At resyndication when the provisions of Section 10320(b)(4)(A) requiring project underwriting to include a capitalized reserve for Short Term Work apply, how should the capitalized reserve and the short term work be reflected in the reysndication application?
- If a resyndication includes a Subsequent Transfer as described in Section 10320(b)(4)(B) and the value of the property has increased from the Initial Transfer, how do I determine the amount of the required seller carryback or equity contribution?
- If a resyndication includes a Subsequent Transfer as described in Section 10320(b)(4)(B), the value of the property has increased from the Initial Transfer, and the seller chooses to provide a carryback loan to meet TCAC requirements, what terms must seller carryback note contain?
