GAO Report Describes Role of LIHTC Syndicators

The Government Accountability Office (GAO) issued a report describing the characteristics and role of syndicators in the Low Income Housing Tax Credit (LIHTC) market from 2005 through 2014. An alternative to direct investing in LIHTC properties is investing in funds established by for-profit and nonprofit syndicators. 

The GAO surveyed 32 of 36 syndicators active as of October 2015, including 19 for-profits and 13 nonprofits. All of the for-profit syndicators and four nonprofit syndicators operated in more than ten states, and ten for-profit and two nonprofit syndicators operated in more than 40 states.

Collectively, the 32 syndicators raised more than $100 billion in LIHTC equity since 1986, helping to fund more than 20,000 properties with about 1.4 million units suitable for occupancy placed into service through 2014. Between 2005 and 2014, the 32 syndicators placed 10,170 properties with 779,723 units into service. The for-profit syndicators participated in about 64% of these properties (73% of the units), while the nonprofit syndicators participated in about 36% of the properties (27% of the units). Properties funded by the for-profit syndicators were, on average, 31 units larger than those funded by the nonprofit syndicators.

Although official counts of LIHTC properties and units do not exist, the GAO used a HUD research database to estimate that the 32 syndicators raised equity for about 75% of all properties (13,532) and 75% of all units (1,038,222) placed into service through the LIHTC program from 2005 through 2014.

Surveyed syndicators had 138 properties foreclosed upon, which represented about 1% of their collective LIHTC properties placed into service as of October 2015.

According to market participants interviewed by the GAO, syndicators play a number of roles in the LIHTC market. Syndicators help connect investors, who can claim tax credits for their investments, to project developers. Syndicators also evaluate deals, acquire properties, monitor construction, and conduct ongoing asset management.

Syndicators are typically compensated through an initial acquisition fee, usually a percentage of the gross equity raised (estimated to range from 2% to 5%), and an annual asset management fee. According to the surveyed participants, several factors influence whether an investor uses a syndicator. For example, a syndicator’s knowledge of local or regional markets could help banks investing in LIHTC funds receive positive consideration under the Community Reinvestment Act (CRA), which encourages depository institutions to meet the credit needs of communities where they operate.

Low-Income Housing Tax Credit: The Role of Syndicators, GAO Report 17-285R, February 16, 2017, is at:  

Information about the LIHTC program is on page 5-29 of NLIHC’s 2016 Advocates’ Guide at: