Low-Income Housing Tax Credits (LIHTC) support long-term affordability for projects, and are the primary federal resource for creating and preserving affordable housing. Learn more about how LIHTC work, benefits of investing, and resources to help complete the process to use LIHTC for your project.
A Unique Way to Reduce Risk
LIHTC funds managed by the Minnesota Equity Fund (MEF) helps investors minimize risk by investing in a variety of LIHTC projects. MEF, a joint venture of GMHF and Cinnaire, provides multiple services including underwriting, asset management, and annual compliance.
Investment Details
How Does LIHTC Work?
The Low-Income Housing Tax Credit (LIHTC) program makes federal tax credits available for the financing of affordable rental properties.
LIHTC accounts for nearly 90% of all affordable rental housing created in the United States today. Often these funds can be combined with other funding sources to get projects to completion and offer affordability for residents far into the future.
Investing in LIHTC
Corporations and banks are important contributors to affordable housing development through their investments in LIHTC. These transactions are typically organized as limited partnerships, or limited liability companies, and investments are made through those entities.
By investing in LIHTC, investors can earn a return on their capital, and bank investors can receive positive consideration toward their rating under the Community Reinvestment Act (CRA).
Over the past two decades, the Low-Income Housing Tax Credit program has financed over 2.7 million affordable housing units nationally, including over 42,000 new homes in Minnesota.
Advantages of Tax Credit Investing
- Provides competitive internal rate of return and diversification of risk
- Represents a double bottom line investment opportunity
- Offers a range of investment options and opportunities, including investment size and geographic location
History of LIHTC Market in Minnesota
- Tax credits worth $125 million are awarded each year in Minnesota.
- LIHTC awards split approximately 60% to the metro area and 40% to Greater Minnesota.
- 25-30 deals per year are developed statewide thanks to tax credits.
- $1.5 million –$10 million in equity is typically raised per development.
- The average development size for tax credit projects ranges from 40 to 70 units.
National Syndication Trends
- Many national syndicators have been inactive in Minnesota in recent years, particularly in Greater Minnesota.
- National syndicators demonstrate growing desire to serve larger metropolitan areas only.
- Fannie Mae and Freddie Mac, historically the largest investors in non-metro developments, are now out of the LIHTC market.
- CRA oriented banks have established (or are establishing) proprietary funds with discrete geographies and requirements for developers.
- Limited investor competition results in increased demand for scarce public and charitable subsidies.
- The internal rate of return for investors offers a competitive return and provides exceptional economic benefits.
Reach Out to Learn More
John Errigo
John Errigo
Managing Director of Equity Investing & NOAH Fund Manager
John directs the work of our subsidiaries — the Minnesota Equity Fund and NOAH Impact Fund.
Paul Marzynski
Paul is an Investment Officer for GMHF subsidiaries Minnesota Equity Fund and NOAH Impact Fund. In this role, he is responsible for working with developers, owner-operators, strategic partners, state and local agencies, and other organizations to assess project viability while working toward closing on approved, funded projects.
Paul has over 25 years of real estate experience with a focus on financing, development, and asset management of affordable multifamily developments. Previously, he was a Senior Multifamily Underwriter for Minnesota Housing, having also worked for Dougherty Mortgage, Stonebridge Companies, and Dominium.
Paul has a Master’s in real estate and finance from the University of Wisconsin–Madison.
Paul Marzynski
Investment Officer
Paul works with developers, owner-operators, and other parties to assess project viability.
Dusty Reese
Dusty is an Investment Officer for GMHF subsidiaries Minnesota Equity Fund & NOAH Impact Fund. He is responsible for working with developers, owner-operators, strategic partners, state and local agencies, and other organizations to assess project viability and work to close funded projects.
Dusty is experienced in affordable housing lending and investor relations. Prior to joining GMHF, Dusty held various positions with Enterprise Housing Credit Investments and Rocky Mountain Community Reinvestment Corporation.
Dusty has a Bachelor of Science in English from Utah Tech University.
Dusty Reese
Investment Officer
Dusty works with developers, owner-operators, and other parties to assess project viability.
Interested in Other Investment Opportunities?
We connect socially driven investors with innovative developers. When you work with GMHF to put your money into affordable housing, families thrive, individuals are healthier, and children achieve better educational outcomes.