GAO Publishes Study on the Role of Syndicators in LIHTC Industry

March 9, 2017
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The U.S. Government Accountability Office recently published a report investigating the role of syndicators in the Low Income Housing Tax Credit industry. GAO was asked to provide information on their involvement in the LIHTC market. This report describes: (1) the characteristics of active syndicators and their activity in the LIHTC market in 2005-2014; and (2) the role syndicators play in the LIHTC market and factors that influence their use.

GAO made no recommendations in this report. Developers of awarded projects typically attempt to obtain funding for their projects by attracting third-party investors willing to invest in the project (that is, provide up-front cash) in exchange for the ability to claim tax credits. The developer sells an ownership interest in the project to one or more investors, or in many instances, to a syndicator acting as an intermediary between the developer and investors.

To determine the characteristics of active syndicators and their LIHTC market activity, GAO identified and verified 36 syndicators active as of October 2015 and gathered data for 32 of those firms. Of the 32 syndicators, 19 were for-profit and 13 were nonprofit. All of the for-profits and four of the nonprofits operated in at least 10 states; 10 for-profit and two nonprofit syndicators operated in more than 40 states. For each type of syndicator, the average experience with LIHTCs was more than 20 years. Syndicators offered proprietary (single-investor) and multi-investor funds. Collectively, the 32 surveyed syndicators had raised more than $100 billion in LIHTC equity since 1986, helping to fund more than 20,000 properties and about 1.4 million units placed in service (suitable for occupancy) through 2014. Projects for which these syndicators raised equity in 2005-2014 represented an estimated 75 percent of all LIHTC properties placed in service in that period. Surveyed syndicators had 138 properties foreclosed upon, which represented about 1 percent of their collective LIHTC properties placed in service as of October 2015.