After over 33 years in the Section 42 business, it still astonishes me that some owners and managers don’t communicate. Just recently I heard of an owner who didn’t tell the management agent the date by which lease-up needed to occur.
The management agent had recently hired a site manager who knew nothing about Section 42. Now it’s costing the developer some significant cash each month because lease-up didn’t occur within the required timeframe. Everyone’s frustrated and understandably feeling desperate. It’s not the norm, of course. Smart deals are put together with the entire team informed.
What is THIS? What is it that owners need to tell management agents and management agents need to know? In this article, THIS is lease-up timing deadlines. Whether new construction or acquisition/rehab, THIS information is vital to avoid financial trouble later.
THIS is IT!
In what month/ year have you (development team/general partner) promised to deliver tax credits for each Building/BIN to an investor?
TheoPRO has taught management agents to ask for THIS key information as soon as their team knows the project is coming up. Don’t wait until a construction crew shows up on site! NOTE: You will need to ask more than once because things change. We recommend once a month. Knowing who to ask is also important.
It’s typical for the investor/limited partner and developer/general partner to promise particular facets of a deal to each other early on because that’s how the value of credits is established which determines how much the investor will pay in during the development process. Getting a project occupied with qualified households is what turns on the credit delivery.
The sooner the management agent knows THIS the better.
Once again, expect THIS to change, but stay in touch regularly. Otherwise, it’s the developer/general partner who ends up losing out because those valuable credits are guaranteed to the investor.
What your management team knows makes a huge difference!