19.4.11.4 LIHTC Equity Pay-In

A. Pursuant to Chapter 14, Section 14.13, the LIHTC investor must contribute at least 20% of the total tax credit equity to the project at the time of Initial Endorsement (with the remaining 80% to be subsequently available). Note that Chapter 14, Section 14.13 allows 10% of the required total equity pay-in to be funded with an equity bridge loan at Initial Endorsement. The required minimum equity installment evidences the tax credit investor’s commitment to the Project. Tax credit equity installments must be made in accordance with either the disbursement agreement attached to the Building Loan Agreement (form HUD92441M) (for new construction and substantial rehabilitation), or the tax credit equity pay-in schedule attached to the Escrow Agreement for Deferred Repairs (form HUD-92476.1) (for loans closed pursuant to 223(f).

1. Lender must submit satisfactory evidence of an agreement that obligates the tax credit investors to make timely and periodic payments to the Borrower of the tax credit equity (typically the limited partnership agreement), which Borrower will use for Project completion costs.

2. See Section 19.4.9.6 and Chapter 14, Section 14.15 for additional guidance on equity bridge loans.

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Chapter 19 Closing Guide 19.4 Document and Diligence Requirements

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3. Note: Pursuant to Housing and Economic Development Recovery Act of 2008 (HERA), and 24 CFR 200.54, HUD cannot require 100% of the tax credit equity be escrowed at closing.