Page 1 GAO-17-285R LIHTC Syndication

441 G St N.W.

Washington, DC 200548

February 16, 2017 

The Honorable Charles E. Grassley

Chairman

Committee on the Judiciary

United States Senate

Low-Income Housing Tax Credit: The Role of Syndicators

Dear Mr. Chairman: 

The Low-Income Housing Tax Credit (LIHTC), established under the Tax Reform Act of 1986, is 

the largest source of federal assistance for developing affordable rental housing and has 

financed about 2.9 million rental units. LIHTCs encourage private-equity investment in lowincome housing through tax credits administered by the Internal Revenue Service (IRS) and 

allocating agencies—typically state or local housing finance agencies established to meet 

affordable housing needs.1 Once the allocating agencies award developers of qualifying 

projects the opportunity to earn tax credits, developers typically attempt to obtain funding for 

their projects by attracting third-party investors willing to invest in the project (provide up-front 

cash) in exchange for the ability to claim tax credits.2 The developer sells an ownership interest 

in the project either directly to investors, or in many instances, to a fund managed by a 

syndicator who acts as an intermediary between the developer and investors.3

Syndicators include specialty firms and large financial institutions. However, information on their 

characteristics or the role they play is limited. You asked us to provide information on 

syndicators’ involvement in the LIHTC market.4 This report describes (1) the characteristics of 

1

Allocating agency responsibilities (in Section 42 of the Internal Revenue Code and regulations of the Department of 

the Treasury) encompass awarding credits, assessing reasonableness of project costs, and monitoring projects.

2

In this report, we use LIHTCs, or tax credits, instead of the statutory term “housing credit dollar amount,” which is the 

allocating agency’s annual apportionment of the state housing credit ceiling. The ceiling is the aggregate amount of 

housing credit allocations that may be made in any calendar year by allocating agencies in the state. The housing 

credit ceiling for each state for 2017 is the greater of $2.35 multiplied by the state’s population or $2,710,000. A 

state’s population for any calendar year is determined by reference to the most recent Census Bureau’s estimate 

released before the beginning of the calendar year for which the housing credit ceiling is set. 

3

Although investors buy an interest in an LIHTC partnership, this process is commonly referred to as buying tax 

credits because the investors can claim tax credits as a consequence of their investment (providing that the building 

is developed and operated according to requirements of Section 42 of the Internal Revenue Code). 

4

We previously reported on other aspects of the LIHTC program, including how IRS and allocating agencies 

administer and oversee the program. See GAO, Low-Income Housing Tax Credit: Some Agency Practices Raise 

Concerns and IRS Could Improve Noncompliance Reporting and Data Collection, GAO-16-360 (Washington D.C.: 

May 11, 2016); and Low-Income Housing Tax Credit: Joint IRS-HUD Administration Could Help Address 

Weaknesses in Oversight, GAO-15-330 (Washington D.C.: July 15, 2015).
Page 2 GAO-17-285R LIHTC Syndication 

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.

To determine the characteristics of active syndicators and their LIHTC market activity, we 

identified and verified 36 syndicators active as of October 2015.5 We gathered data for 32 firms 

in total—31 through a no-cost contract with CohnReznick, a national accounting firm, which 

serves a broad group of clients, including participants in the affordable housing industry (see 

encl. I for a list of the 32 syndicators).

6 CohnReznick maintains a database with syndicatorprovided information that is drawn from their audited financial statements and other sources.

7

We used CohnReznick to provide a common source of financial data and mitigate the potential 

low response rate from surveying syndicators directly. On behalf of the 31 syndicators (of the 36 

we verified) for which it had information, CohnReznick completed a survey to capture requested 

data. It then sent the completed surveys to the firms to review and, if necessary, correct before 

transmitting the data to us. CohnReznick provided us statements from the firms attesting to the 

completeness and accuracy of the data. We then reviewed the data for obvious errors and 

inconsistences. We also received a survey response directly from a syndicator not in the 

CohnReznick data, which we incorporated in our analysis. The collected data were the most 

current available as of October 2015 (when we finalized our survey). The financial data were as 

of the end of calendar year 2014 and the foreclosure data were as of October 2015. We 

reviewed related documentation, interviewed knowledgeable officials, and tested the data for 

missing data and obvious errors, and found the data were sufficiently reliable to describe the 

characteristics and market activity of LIHTC syndicators. Enclosure II contains more details 

about our scope and methodology.

To determine the role syndicators play in the LIHTC market and the factors that influence their 

use, we interviewed representatives of organizations whose members are LIHTC syndicators, 

developers, lenders, investors, and others who have studied the program. More specifically, we 

interviewed representatives of the Affordable Housing Investors Council, Affordable Housing 

Tax Credit Coalition, Housing Partnership Network, Mortgage Bankers Association, National 

Association of Home Builders, National Association of State and Local Equity Funds, National 

Council of State Housing Agencies, and Stewards of Affordable Housing for the Future. We 

also interviewed market stakeholders who have been involved in LIHTCs and provided 

supportive services for syndicators. Collectively, we interviewed 9 syndicators, 6 investors, 16 

developers, 3 lenders, and 12 other market stakeholders (including accounting firms, 

 5

We define an active syndicator as one who, as of October 2015, syndicated equity interests in properties with LIHTC 

potential that another party developed (that is, they syndicated interests for developers with whom they are not 

affiliated). The data in this report exclude properties in portfolios of syndicators not active as of October 2015.

6

In total, we collected responses from 32 of the 36 verified syndicators. CohnReznick contacted 2 of the remaining 

syndicators—nonprofits that operate in limited geographic areas—about participating in the survey, but each declined 

to participate, noting that they managed so few properties that it was not cost-effective to track and report syndication 

data. The remaining 2 firms did not respond to our data request. We also identified 4 firms that may be LIHTC 

syndicators; the firms did not respond to efforts to verify their status and are excluded.

7

According to CohnReznick officials, syndicators complete a template that they provide to CohnReznick. 

CohnReznick uses these data to issue periodic reports. According to CohnReznick officials, the database contains 

information for more than 20,500 LIHTC properties, representing more than 70 percent of properties placed in service 

since the program began in 1986 and within (or just beyond) the 10-year period in which tax credits can be claimed.

CohnReznick officials said the remaining 30 percent of properties were those funded through defunct syndicators, 

direct investments, or properties that completed their compliance period or were sold. CohnReznick updates the 

database information every 2 years.
Page 3 GAO-17-285R LIHTC Syndication 

researchers and professional staff of industry groups).8 We selected these entities to cover the 

range of participants in the LIHTC market and based on recommendations from industry 

experts. Lastly, we interviewed officials from the Department of Housing and Urban 

Development (HUD), Department of the Treasury (Treasury), and IRS.9

We conducted this performance audit from May 2015 to February 2017 in accordance with 

generally accepted government auditing standards. Those standards require that we plan and 

perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our 

findings and conclusions based on our audit objectives. We believe that the evidence obtained 

provides a reasonable basis for our findings and conclusions based on our audit objectives.

Results in Brief

Characteristics of active syndicators included differing organizational types, generally multistate 

operations, long experience with LIHTCs, and use of two types of investments. Of the 32 

syndicators we surveyed, 19 were for-profit and 13 were nonprofit. All the for-profit syndicators 

and 4 nonprofit syndicators operated in more than 10 states; 10 for-profit and 2 nonprofit 

syndicators operated in more than 40 states. Each syndicator type averaged more than 20 

years of experience with LIHTCs. Syndicators offered proprietary (single-investor) and multiinvestor 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 (that is, suitable for occupancy) through 2014. Surveyed syndicators had 

138 properties foreclosed upon, which represented about 1 percent of their collective LIHTC 

properties placed in service as of October 2015. 

According to market participants, syndicators play several roles in the LIHTC market. For 

example, syndicators help connect investors—who can claim tax credits as a consequence of 

their investment—and developers and oversee the fund’s acquisition and the ongoing 

management of the projects. Syndicators are typically compensated through an initial 

acquisition fee —usually a percentage of the gross equity raised—and an annual asset 

management fee. According to the market participants, several factors influence whether an 

investor uses a syndicator. For example, an investor might not have the capacity or expertise to 

directly acquire and manage an LIHTC investment. Investors consider different variables when 

deciding which syndicator to use, such as prior relationships and the amount of project equity 

syndicators sought for the tax credits. They added that a syndicator’s knowledge of local or 

regional markets could also play an important role to help investors such as banks receive 

positive consideration under the Community Reinvestment Act (CRA), which encourages 

depository institutions to meet the credit needs of communities where they operate.10

 8

We included one organization in three categories because it functioned as a syndicator, developer, and researcher. 

9

IRS, a bureau of Treasury, is the federal entity responsible for enforcing taxpayer compliance and overseeing 

allocating agencies’ implementation of the LIHTC program. HUD has no direct role in administering the program, but 

voluntarily collects some data on LIHTC projects and, as required by the Housing and Economic Recovery Act of 

2008, collects data on the characteristics of tenants in LIHTC projects. Pub. L. No. 110-289 § 2835(d). 122 Stat. 2874 

(2008), codified at 42 U.S.C. §1437z-8.

1012 U.S.C. §§ 2901-2908. Federal financial regulators—the Board of Governors of the Federal Reserve System, the 

Federal Deposit Insurance Corporation, and the Office of the Comptroller of the Currency—are required to assess 

periodically and rate (score) each bank’s record of helping to meet the credit needs of its entire community. 

Investment in LIHTC projects may help a bank receive positive consideration towards its regulatory rating. 
Page 4 GAO-17-285R LIHTC Syndication 

Background

LIHTCs incentivize developers and investors to provide affordable rental housing for low-income 

households (see fig. 1).11 Allocating agencies receive allocations of tax credits in accordance 

with the Internal Revenue Code (Code) and award the opportunity to receive the credits to 

specific projects that promise to meet the Code’s requirements and allocating agencies’ 

priorities. In return for reserving a percentage of project units with restrictions on rents and 

tenant incomes for at least 30 years, taxpayers (project owners) can claim a tax credit over 10 

years.12 IRS can recapture some or all of the credits if the taxpayers have not met the 

requirements during a 15-year compliance period. 

Figure 1: Overview of Low-Income Housing Tax Credit Process 

Once a project is awarded tax credits, developers often attempt to obtain funding for the 

projects by attracting investors willing to contribute equity financing. The developer sells an 

ownership interest in the project either directly to investors, or in many instances, to a fund 

managed by a syndicator who acts as an intermediary between the developer and investors. 

Tax credit investors can be individuals, but most of the investments come from corporations. 

Generally, an investor interested in housing tax credits can either invest directly or through a 

syndicated investment. Under the direct investment model, an investor owns a “limited” partner 

 1126 U.S.C. § 42. 

12 The maximum allowable rent for eligible households is 30 percent of a calculated income limit. A project must 

reserve at least 20 percent of the available units for households earning up to 50 percent of the area’s median gross 

income (adjusted for family size), or at least 40 percent of the units for households earning up to 60 percent of the 

area’s median gross income (adjusted for family size).
Page 5 GAO-17-285R LIHTC Syndication 

interest in the partnership that owns the underlying property, with the developer typically 

assuming the “general” partner interest. This approach is typically feasible only for investors that 

have internal capacity to fund and manage the acquisition, underwriting, and management of 

the underlying development project. As a result, only a handful of larger institutional investors 

favor this approach.

13

In contrast, the syndicated investment approach enables investors to invest in a fund organized 

and managed by syndicators. The funds managed by syndicators are limited partnerships in 

which investors own the limited partner interest in the fund, with the fund in turn owning the 

limited partner interest in various property partnerships. Syndicators manage two types of funds: 

proprietary funds and multi-investor funds. In both cases, the syndicator originates potential 

investments, performs underwriting, and presents the potential investment to investors.14

Proprietary funds typically consist of a single investor who desires a higher level of control over 

the location of the properties financed. A multi-investor fund allows an investor to diversify its 

risk because the fund invests in several properties, and the investors share potential risks and 

rewards based upon their proportional equity contribution.

Most Active Syndicators Surveyed Were For-Profit Firms That Operate in Multiple States

Characteristics of active syndicators included differing organizational types, generally multistate 

operations, long experience with LIHTCs, and use of proprietary and multi-investor funds to 

raise equity. The 32 syndicators we surveyed were for-profit or nonprofit organizations and had 

varying geographic scopes. All 19 for-profit syndicators and 4 of the 13 nonprofit syndicators 

operated in more than 10 states; 10 for-profits and 2 nonprofits operated in more than 40 states. 

In contrast, 9 nonprofits were regional—that is, they operated in more limited geographic areas. 

As of October 2015, there was an average of 17 active syndicators operating in each state, with 

California (23), Illinois (23), Indiana (24), Michigan (24), and Texas (23) having the most. 

Both nonprofit and for-profit syndicators averaged more than 20 years of experience with 

LIHTCs, and collectively, the surveyed syndicators averaged 24 years of experience. Twelve of 

the 13 nonprofit syndicators had worked with the LIHTCs for at least 21 years, and 8 for-profit 

and 1 nonprofit syndicator had participated in LIHTCs since their enactment in 1986. In contrast, 

4 for-profit syndicators had less than 10 years of LIHTC experience. 

The 32 firms we surveyed closed more than $100 billion in equity since 1986.15 Of that amount, 

about 71 percent (about $71 billion) was raised from 2005 through 2014. As shown in figure 2, 

in this period syndicators closed more than $6.6 billion in equity annually, with the exception of 

2008 ($5.3 billion) and 2009 ($4.3 billion). The sharp decline in the amount invested in 2008 and 

2009 was largely caused by the economic recession and the withdrawal of Freddie Mac and 

 13See CohnReznick, The Low-Income Housing Tax Credit at Year 30: Recent Investment Performance (2013-2014)

(Boston, Mass.: December 2015). 

14To mitigate potential risk, syndicators will screen properties for quality and sustainability, such as ensuring that the 

development team has adequate resources to build and operate the property, and mechanisms are in place to avoid 

foreclosure.

15According to one syndicator, a fund’s “closing” generally refers to a fund’s formal creation and investors’ equity 

commitments. However, CohnReznick officials told us proprietary funds may remain open for multiple years, 

continuing to attract equity throughout that period. These syndicators track the funds based on when the deals in the 

fund close, not when the fund itself closes. Consequently, we report equity figures for those funds on that basis.
Page 6 GAO-17-285R LIHTC Syndication 

Fannie Mae from the LIHTC marketplace.16 Various industry sources estimate that the two 

companies represented as much as 40 percent of the invested equity prior to their withdrawal.

Figure 2: Amount of Equity Syndicators Closed in 2005–2014 in Properties with Low-Income Housing Tax 

Credits, by Fund Type 

Note: Data are from a survey of 32 syndicators that were active as of October 2015.

Collectively, the syndicators we surveyed closed an average of 32 funds from 2005 through 

2014. About two-thirds of all the funds closed during this period were proprietary funds. But the 

average value of the closed multi-investor funds was about $95 million, while the average 

proprietary fund closed was about $54 million. Consequently, about 51 percent of the equity 

these syndicators raised in 2005–2014 was in multi-investor funds. The relative amount of 

equity invested in the two fund types has varied over time. For example, the proportion of equity 

closed in proprietary funds ranged from about 31 percent (2005) to 66 percent (2009). 

Collectively, the 32 surveyed firms placed more than 20,000 properties and about 1.4 million 

units in service since 1986. These 32 syndicators placed 10,170 properties and 779,723 units in 

service from 2005 through 2014. The for-profit syndicators we surveyed participated in about 64 

percent of these properties (representing about 73 percent of the units), while the nonprofit

syndicators we surveyed were involved in about 36 percent of the properties (about 27 percent 

of units). Properties funded by the for-profit syndicators we surveyed were, on average, about 

31 units larger than those funded by the nonprofit syndicators.17 While there are no official 

 16Fannie Mae and Freddie Mac are private, federally chartered companies that provide liquidity to the home 

mortgage market. In September 2008, Fannie Mae and Freddie Mac were placed into federal conservatorships.

17On average, properties funded by for-profit syndicators had 88 units, while those funded by the nonprofit 

syndicators had 57 units. Projects funded by the regional nonprofits had an average of 47 units. 
Page 7 GAO-17-285R LIHTC Syndication 

counts of LIHTC properties or units, using a HUD research database, we estimated that the 32 

syndicators we surveyed raised equity for about 75 percent of the properties (13,532) and 75 

percent of units (1,038,222) placed in service through the LIHTC program in 2005–2014.18

Overall, the syndicators in our survey had 138 properties (containing16,774 units)foreclosed 

upon, which represented about 1 percent (0.7 percent and 1.2 percent, respectively) of their 

collective LIHTC properties and units placed in service as of October 2015. Fifteen of the 32 

syndicators we surveyed had at least 1 property foreclosed since the firm was founded—2 

nonprofit and 13 (68 percent) for-profit syndicators. None of the regional nonprofits had any 

properties foreclosed. HUD officials told us that foreclosures for multifamily developments 

(including LIHTC) were generally rare because lenders often try to restructure loans to avoid 

foreclosure. Also, syndicators conduct additional underwriting and may assist struggling 

projects.19 See enclosure III for additional information about the surveyed syndicators.

Syndicators Play Key Roles in Developing and Monitoring LIHTC Projects

Syndicators can undertake multiple roles in developing and overseeing LIHTC projects. Market 

participants described these roles as follows:

• Connecting investors to projects. Syndicators link potential investors and developers, 

connecting investors’ desires and needs—such as to receive positive consideration under 

CRA—with developers that need equity for their project.

• Evaluating deals and acquiring properties. When establishing a fund, a syndicator will 

underwrite and evaluate potential projects to identify and minimize potential risks and 

increase the likelihood that the proposed project will succeed. The syndicators will then 

oversee the fund’s acquisition of these projects. 

• Monitoring projects during construction. Once the deal has closed, the syndicator 

monitors the project through the construction process and disburses funds to the developer.

• Conducting ongoing asset management (inspect, monitor, and report on properties): 

Once the project is built, the syndicator is responsible for asset management and oversees 

the project until the later of the end of the compliance period or when the fund’s interest in 

the property is disposed of. Syndicators help ensure that the project complies with LIHTC 

requirements, the property is maintained, and that its financial status is good. Syndicators 

also report regularly, usually through quarterly and annual financial statements, and prepare 

tax forms for investors.

20

• Helping underperforming projects. Investors expect syndicators to identify potential 

problems and intercede if necessary, such as replacing under- or nonperforming general 

partners. Syndicators also may use their own reserves to help resolve problems.

• Disposing of interest in properties. At the end of the 15-year compliance period, 

syndicators help liquidate and sell the properties in the syndicated fund.

 18The estimated number of properties and units are based on data in HUD’s LIHTC database, which may not include 

all properties and units placed in service (due to reporting lags and other limitations). 

19Underwriting may include reviewing the expertise and capacity of the development team, the proposed 

development budget, financing, and the limited partners’ rights and responsibilities. 

20As we previously reported, limited data on syndicators’ performance measurement or monitoring activities for 

LIHTC projects are available to the public, according to Treasury officials. See GAO-15-330.
Page 8 GAO-17-285R LIHTC Syndication 

In addition, some of the market participants we interviewed suggested that syndicators can help 

investors receive their expected rate of return. For example, syndicators may reduce their own 

fees or use their own resources to bridge any gap between the actual and expected returns. 

According to market participants we interviewed, syndicators typically are compensated for 

these services in two ways.21 First, syndicators receive an acquisition fee—usually a percentage 

of the gross equity raised—when the asset is acquired that is intended to compensate the 

syndicator for services, cover third-party costs such as legal and accounting fees, and fund 

reserves to protect the investment. One stakeholder estimated this fee ranged from 2–5 percent 

of the total investment. Second, syndicators may receive an annual asset-management fee over 

the life of the investment to cover actual expenses such as for accounting services and 

contributions to reserves. These fees are negotiated and typically are a percentage of the 

invested assets or a fee based on the number of properties in the fund. Representatives from 

two industry groups told us the fees that syndicators receive for their services have declined in 

recent years, in part due to pricing pressures from both developers (that seek to maximize the 

equity received for each LIHTC), and investors (that want to maximize their rate of return).

Many of the large investors that we interviewed invest through both a syndicator and directly. 

Representatives of four of the six large investors we interviewed noted that they used a 

syndicator for at least 70 percent of their LIHTC deals. In contrast, another representative noted 

that her company only used a syndicator about 20 percent of the time. At least three of these six 

investors invest in both proprietary and multi-investor funds. 

According to the market participants we interviewed, several factors influence an investor’s 

choice to use a syndicator:

• Need for expertise. For most investors, LIHTC deals are not their core business and 

syndicators can provide the necessary expertise to successfully invest in LIHTCs. 

Syndicators are also often able to put together more complicated deals. 

• Lack of staff resources or interest in ongoing asset management. An investor that does 

not use a syndicator must develop the internal capacity to structure and monitor its LIHTC 

projects for the 15-year compliance period. Many investors instead outsource these 

responsibilities by using a syndicator. 

• CRA considerations. An investor that is a depository institution may use a syndicator to 

help receive positive consideration under CRA, particularly if the syndicator already has 

potential projects that would help meet the credit needs of communities in which the 

institution operates. Investment in LIHTC projects may help a bank receive positive 

consideration towards its regulatory rating.

• Size of investment. Large investors may use a syndicator to more efficiently invest large 

amounts of money. Similarly, smaller investors may lack enough capital to invest in a LIHTC 

project independently and will instead invest through a multi-investor fund.

The entities involved in LIHTC projects maintain relationships with multiple parties. The large 

investors we interviewed said that they generally work with 8–14 syndicators at a time. Similarly, 

 21We will provide additional information on the costs associated with syndication in a future report. Tax law does not 

allow syndication costs to be included in a project’s eligible basis (the total allowable costs associated with 

depreciable costs in the project). Under Internal Revenue Code §709, these costs include the preparation of offering 

memorandums and promotional materials, broker fees and commissions, certain legal fees, and due diligence costs. 
Page 9 GAO-17-285R LIHTC Syndication 

syndicators have relationships with multiple investors. The market participants also noted that 

most syndicators have a core group of investors with which they work and, similarly, developers 

may maintain relationships with a group of syndicators. 

LIHTC market participants told us they consider multiple factors in selecting syndicators. First, 

developers, syndicators, and investors noted that previous experience with a syndicator was an 

important factor. Second, many of the developers noted that they selected investors (both direct 

investors and syndicated funds) based on the offered tax credit pricing (equity contribution per 

tax credit received) and terms. Third, investors noted they evaluated the strength of the 

syndicator’s business and the quality of its portfolio. Some developers noted that they might 

take a lower return in exchange for a stronger partner. Fourth, because of CRA considerations, 

some investors may take into account a syndicator’s geographic presence (or expertise). Fifth, 

some investors also might choose a syndicator (or mix of syndicators) to help diversify the risk 

in their investment portfolio. Lastly, some developers could choose a syndicator based on 

mission alignment—a developer might select a nonprofit syndicator specializing in housing for a 

particular population rather than a for-profit syndicator that might offer better pricing.

We provided a draft of this report to HUD, IRS, and Treasury for their review and comment. 

Treasury provided technical comments that we incorporated, as appropriate. IRS and HUD did 

not provide comments. We also provided a draft of this report to CohnReznick and the National 

Association of State and Local Equity Funds (a nonprofit that promotes nonprofit syndicators 

with a limited geographic scope) for their review and comment. We incorporated their technical 

comments where appropriate.

As agreed with your office, unless you publicly announce the contents of this report earlier, we 

plan no further distribution until 30 days from the report date. At that time, we will send copies to 

the Secretaries of HUD and Treasury and the Commissioner of Internal Revenue. In addition, 

the report will be available at no charge on the GAO website at http://www.gao.gov.

If you or your staff have any questions about this report, please contact me at (202) 512-8678 or 

GarciaDiazD@gao.gov. Contact points for our Offices of Congressional Relations and Public 

Affairs may be found on the last page of this report. GAO staff who made key contributions to 

this report include Steve Westley (Assistant Director), Daniel Newman (Analyst in Charge), 

Brandon Kruse, Cory Marzullo, Farrah Graham, John McGrail, and Barbara Roesmann.

Sincerely yours,

Daniel Garcia-Diaz

Director, 

Financial Markets and Community Investment

Enclosures – 3
Page 10 GAO-17-285R LIHTC Syndication 

Enclosure I: List of Verified Syndicators Actively Syndicating Low-Income Housing Tax 

Credits (LIHTC) 

The 32 syndicators that provided information for this report are listed below:

Aegon USA Reality Advisors, LLC 

Alden Capital Partners, LLC 

Alliant Capital, Ltd.

Boston Capital 

Boston Financial Investment Management 

CAHEC (Community Affordable Housing Equity Corporation) 

Cinnaire 

CREA, LLC

Enterprise Community Investment, Inc.

Housing Vermont 

Hudson Housing 

Massachusetts Housing Investment Corporation 

Merritt Community Capital Corporation

Michel Associates, Ltd.

Midwest Housing Equity Group, Inc. 

National Affordable Housing Trust 

National Equity Fund, Inc.

NDC Housing and Economic Development Corporation

Northern New England Housing Investment Fund 

Ohio Capital Corporation for Housing 

PNC Tax Credit Capital

R4 Capital, LLC 

Raymond James Tax Credit Funds, Inc. 

RBC Tax Credit Equity, LLC 

Red Stone Equity Partners, LLC 

Regions Affordable Housing, LLC 

The Richman Group, Inc. 

Stratford Capital Group 

The Summit Group 

U.S. Bank

Virginia Community Development Corporation 

WNC & Associates, Inc.
Page 11 GAO-17-285R LIHTC Syndication 

As of December 2016, four additional verified syndicators were active in the LIHTC market 

(listed below).

Churchill-Stateside Group

Hawaii Housing Finance, Inc.

Mountain Plains Equity Group, Inc.

St. Louis Equity Fund, Inc. (including Kansas City Equity Fund) 
Page 12 GAO-17-285R LIHTC Syndication 

Enclosure II: Objectives, Scope, and Methodology

This report describes the role of syndicators in the Low-Income Housing Tax Credit (LIHTC). 

More specifically, we describe (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.

To determine the characteristics of active syndicators and their LIHTC market activity, we 

compiled a list of active syndicators through Internet and literature searches and verified the list 

with three industry groups and professionals.22 This process resulted in identifying and verifying 

36 syndicators that were active as of October 2015.23 We collected data on specific firms

primarily through a no-cost contract with CohnReznick, a national accounting firm with a 

significant practice serving the affordable housing industry.

24 CohnReznick maintains historical 

data from the syndicators’ audited financial statements and other sources on tax credit 

properties for which syndicators or investors are active asset managers.25 CohnReznick collects 

the data for its database using a standard reporting template that it distributes to syndicators 

every 2 years.26 We used CohnReznick to provide a common source of financial data and to

mitigate the potential low response rate from a survey sent directly to the syndicators. The 

collected data were the most current available as of October 2015 (when we finalized our 

syndicator survey). The financial data were as of the end of calendar year 2014 and the 

foreclosure data were as of October 2015.

Through the following steps we received survey information for a total of 32 of the 36 verified 

firms. 

• CohnReznick completed a survey to capture the desired data on behalf of the 31 firms for 

which it had information in its database. It then sent the completed surveys to the firms to 

review and, if necessary, make corrections to the information. CohnReznick obtained and 

provided to us written statements from the 31 syndicators attesting to the completeness and 

accuracy of data that CohnReznick provided to us on their behalf. To further confirm the 

completeness and accuracy of data we received from CohnReznick, we tested the data for 

missing data and obvious errors and reviewed documentation on the system in which 

 22We conducted the searches between February and September 2015. 

23We define an active syndicator as one who, as of October 2015, syndicated equity interests in properties with

LIHTC potential that another party developed (that is, they syndicated credits for developers with whom they are not 

affiliated). The data in this report exclude properties in the portfolios of syndicators that were not active as of October 

2015.

24For each of the 31 firms for which it had data, CohnReznick provided information such as when the firm began 

syndicating and its organizational structure; the states in which the firm had LIHTC projects; the number of funds and 

the equity raised by fund type in 2005–2014 and since the firm began syndicating; the number of properties and units 

the firm placed in service in 2005–2014 and since the firm began syndicating; and the number of properties and units 

that had been foreclosed upon as of October 2015. CohnReznick also collects development cost data from 

syndicators and has issued periodic reports that address the performance of properties financed with LIHTCs. 

25According to CohnReznick officials, their database contains information for more than 20,500 LIHTC properties, 

representing more than 70 percent of properties placed in service since the LIHTC program began in 1986 and that 

are still within (or just beyond) the 10-year period in which tax credits can be claimed. CohnReznick officials said the 

remaining 30 percent of properties were those funded through defunct syndicators, direct investments, or properties 

that completed their compliance period or were sold. 

26CohnReznick tested the returned templates to help ensure the integrity and accuracy of the received data.
Page 13 GAO-17-285R LIHTC Syndication 

CohnReznick maintains these data. We found that the data were sufficiently reliable for 

purposes of describing the characteristics and market activity of LIHTC syndicators.

• CohnReznick contacted two of the remaining firms, which were not in its database, about 

the survey, but they declined to participate. These firms—all nonprofits that operated in 

limited geographic areas—noted that they managed so few properties that it was not costeffective to track and report syndication data. 

• We also received survey responses directly from one syndicator not included in the 

CohnReznick database, which we incorporated into our analysis. 

• The remaining two syndicators we verified did not respond to our data request.27

To determine the role syndicators play in LIHTCs and the factors that influence their use, we 

interviewed representatives of organizations whose members are LIHTC syndicators, 

developers, lenders, investors, and others who have studied housing tax credits and the LIHTC 

program. More specifically, we interviewed representatives of the Affordable Housing Investors 

Council, Affordable Housing Tax Credit Coalition, Housing Partnership Network, Mortgage 

Bankers Association, National Association of Home Builders, National Association of State and 

Local Equity Funds, National Council of State Housing Agencies, and Stewards of Affordable 

Housing for the Future.28 We also interviewed market stakeholders who have been involved in 

LIHTC and provided supportive services for syndicators. Collectively, we interviewed 9 

syndicators, 6 investors, 16 developers, 3 lenders, and 12 other market stakeholders (including 

accounting firms, researchers, and professional staff of industry groups).29 We selected these 

entities to cover the range of participants in the LIHTC market and based on recommendations 

from industry experts. Lastly, we interviewed officials from the Internal Revenue Service (IRS), 

the Department of Housing and Urban Development, and the Department of the Treasury. IRS, 

a bureau of the Department of the Treasury, is the federal entity responsible for enforcing 

taxpayer compliance and overseeing allocating agencies’ implementation of the LIHTC 

program. The Department of Housing and Urban Development has no direct role in 

administering the credits, but voluntarily collects some data on LIHTC projects and, as required 

by the Housing and Economic Recovery Act of 2008, collects data on the characteristics of 

tenants in LIHTC projects.30

We conducted this performance audit from May 2015 to February 2017 in accordance with 

generally accepted government auditing standards. Those standards require that we plan and 

 27We also identified four firms that may be LIHTC syndicators; the firms did not respond to efforts to verify their status

and are excluded. 

28The Affordable Housing Investors Council is a nonprofit whose members invest in affordable housing by purchasing 

LIHTCs. The Affordable Housing Tax Credit Coalition is a trade organization of nonprofit and for-profit syndicators, 

investors, lenders, developers, legal and accounting professionals, and state allocating agencies. The Housing 

Partnership Network comprises 100 housing and community development nonprofits that work to ensure access to 

housing opportunities. The Mortgage Bankers Association advocates for the real estate finance industry; among other 

things, its members finance LIHTC deals. The National Association of Home Builders advocates on behalf of and 

supports the housing industry. The National Association of State and Local Equity Funds is a nonprofit that promotes 

the efficient management of nonprofit syndicators with a limited geographic scope. The National Council of State 

Housing Agencies is a nonprofit created by the nation's state Housing Finance Agencies to coordinate and leverage 

their federal advocacy efforts for affordable housing. Stewards of Affordable Housing for the Future has 11 nonprofit 

members that acquire and preserve multifamily rental properties for low-income families, seniors, and disabled 

individuals. 

29We included one organization in three categories because it functioned as a syndicator, developer, and researcher. 

30Pub. L. No. 110-289 § 2835(d). 122 Stat. 2874 (2008), codified at 42 U.S.C. §1437z-8.
Page 14 GAO-17-285R LIHTC Syndication 

perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our 

findings and conclusions based on our audit objectives. We believe that the evidence obtained 

provides a reasonable basis for our findings and conclusions based on our audit objectives.
Page 15 GAO-17-285R LIHTC Syndication 

Enclosure III: Additional Syndicator Data

We analyzed information from 32 active syndicators that we surveyed—those that as of October 

2015 were syndicating equity interests in properties that have potential for Low-Income Housing 

Tax Credits (LIHTC)—along several characteristics: 

• organizational structure and states in which they operated, as of October 2015

• years of experience with LIHTCs, as of October 2015

• number of funds and the equity they raised by fund type in 2005–2014 and since the firm 

began syndicating

• number of properties and units they placed in service in 2005–2014 and since the firm 

began syndicating

• number of properties and units that had been foreclosed on as of October 2015. 

The 32 syndicators we surveyed had different organizational structures; 19 were for-profit and 

13 were nonprofit. The majority of syndicators operated in more than 10 states. More 

specifically, all the for-profit and 4 of the nonprofit syndicators operated in at least 11 states (see 

table 1). And half or more of these for-profit and nonprofit syndicators operated in more than 40

states. In contrast, 9 nonprofits operated regionally or in a single state. 

Table 1: Number of States in Which Syndicators Operated, by Type, as of October 2015

Type of entity:

Nonprofit For-profit

Total

1-10 states 9 0 9

11-30 states 1 5 6

31-40 states 1 4 5

More than 40 2 10 12

Total 13 19 32

Average 15 40 30

Median 8 42 32

Maximum 51 54 54

Minimum 1 16 1

Source: GAO analysis of CohnReznick and syndicator data. | GAO-17-285R

Note: Data are from a survey of 32 syndicators that were active as of October 2015.
Page 16 GAO-17-285R LIHTC Syndication 

As shown in figure 3, Indiana and Michigan had the most syndicators (24) operating in their 

states, as of October 2015. In contrast, Hawaii had the fewest (8).

Figure 3: Number of Syndicators Operating in Each State, as of October 2015

Note: Data are from a survey of 32 syndicators that were active as of October 2015.
Page 17 GAO-17-285R LIHTC Syndication 

About three-quarters of the syndicators we surveyed had been syndicating equity interests in 

LIHTC properties for more than 20 years (see table 2). Each type of syndicator averaged at 

least 22 years of experience with LIHTCs. 

Table 2: Years Syndicating Low-Income Housing Tax Credits, by Syndicator Type, as of October 2015

Nonprofit For-profit Total

Number Percent of

type

Number Percent of 

type

1-10 years 0 0 4 21 4

11-20 years 1 8 4 21 5

21-29 years 11 85 3 16 14

30 years 1 8 8 42 9

Total 13 100 19 100 32

Average number of years 26 22 24

Median number of years 27 29 27

Source: GAO analysis of CohnReznick and syndicator data. | GAO-17-285R

Notes: Data are from a survey of 32 syndicators that were active as of October 2015. Percentages may not sum to 100 percent due 

to rounding.

During 2005–2014, for-profit syndicators raised the majority of funds for LIHTC properties 

through proprietary (singe-investor) funds (see fig. 4). In contrast, nonprofit syndicators, which 

were dominated by regional syndicators, raised about 62 percent of their funds through multiinvestor funds. For example, regional nonprofits raised 85 percent of their equity through these 

funds. 

Figure 4: Amount of Equity Raised for Properties with Low-Income Housing Tax Credits in 2005–2014, by 

Syndicator and Fund Type 

Note: Data are from a survey of 32 syndicators that were active as of October 2015.

In general, nonprofit syndicators raised more equity each year during 2005–2014 through multiinvestor funds than through proprietary funds, while for-profit syndicators generally raised more 

equity each year through proprietary funds (see fig. 5). According to CohnReznick, some 
Page 18 GAO-17-285R LIHTC Syndication 

proprietary funds may be open to new investments for multiple years and continue to attract 

equity throughout that period. The syndicators track the funds raised based on when the 

projects in the fund close, not when the fund itself closes. 

Figure 5: Amount of Equity Closed by Fund and Syndicator Type in 2005–2014 for Properties with LowIncome Housing Tax Credits 

Note: Data are from a survey of 32 syndicators that were active as of October 2015.

As shown in figure 5, the volume of equity syndicators closed in 2008 and 2009 sharply 

decreased, particularly for multi-investor funds run by for-profit syndicators. The sharp decline 

was largely caused by the economic recession and the withdrawal of Freddie Mac and Fannie 

Mae from the LIHTC marketplace. Various industry sources estimate that the two companies 

represented as much as 40 percent of the invested equity prior to their withdrawal.
Page 19 GAO-17-285R LIHTC Syndication 

For-profit syndicators closed more proprietary funds than multi-investor funds each year from 

2005 through 2014 (see fig. 6). In contrast, nonprofits closed more multi-investor funds in most 

years. However, there was a large increase in the number of proprietary funds nonprofit 

syndicators closed from 2008 through 2009.

Figure 6: Number of Funds Closed by Fund and Syndicator Type in 2005–2014 for Properties with LowIncome Housing Tax Credits 

Note: Data are from a survey of 32 syndicators that were active as of October 2015.
Page 20 GAO-17-285R LIHTC Syndication 

The amounts of equity that the 32 syndicators raised for LIHTC properties since their firms

began syndicating has varied, but 2 syndicators—1 nonprofit and 1 for-profit—closed more than 

$10 billion total in equity for LIHTC properties (see fig. 7). 

Figure 7: Amount of Equity Closed for Properties with Low-Income Housing Tax Credits, by Dollar Range and 

Type of Syndicator, as of October 2015

Note: Data are from a survey of 32 syndicators that were active as of October 2015.
Page 21 GAO-17-285R LIHTC Syndication 

For-profit syndicators helped to fund most of the properties involving syndicators in recent 

years. More specifically, for-profit syndicators were involved in about two-thirds (64 percent) of 

the LIHTC properties in which the 32 syndicators participated during 2005–2014 (see fig. 8). 

The properties in which for-profit syndicators were involved also represented about threequarters (73 percent) of the units placed in service through syndicated properties in that period.

Figure 8: Proportion of Properties and Units Placed in Service in 2005–2014 for Low-Income Housing Tax 

Credit Projects in Which Syndicators Participated, by Type of Syndicator 

Note: Data are from a survey of 32 syndicators that were active as of October 2015.
Page 22 GAO-17-285R LIHTC Syndication 

While the number of units nonprofit syndicators placed in service during 2005–2014 remained 

relatively constant, the number of units placed in service by for-profit syndicators decreased 

since 2007 (see fig. 9). In 2007, for-profit syndicators placed about 75,000 units in service. In 

contrast, they placed about 46,000 units in service in 2014, the second fewest during that 

period. 

Figure 9: Number of Units Placed in Service in 2005–2014 for Low-Income Housing Tax Credit Projects in 

Which Syndicators Participated, by Type of Syndicator 

Note: Data are from a survey of 32 syndicators that were active as of October 2015.
Page 23 GAO-17-285R LIHTC Syndication 

The 32 syndicators surveyed had 138 of their properties (containing 16,774 units) foreclosed 

upon since they were founded (see fig. 10). The foreclosures represented 0.7 percent and 1.2 

percent of their collective LIHTC properties and units, respectively, placed in service as of 

October 2015. Properties funded by for-profit syndicators accounted for most (76 percent) of 

these foreclosures, which represented 0.8 percent of the for-profit syndicators’ total properties. 

Figure 10: Number of Foreclosures and Foreclosure Rates for Low-Income Housing Tax Credit Projects and 

Units with Syndicator Participation, 1986–2015, by Type of Syndicator 

Note: Data are from a survey of 32 syndicators that were active as of October 2015.

(250813)
Page 24 GAO-17-285R LIHTC Syndication 

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