Commitments and Contingencies

12 Months Ended

Dec. 31, 2022

Commitments and Contingencies Disclosure [Abstract]

18. Commitments and Contingencies

Legal Proceedings

The Partnership, from time to time, is subject to various legal proceedings and claims that arise in the ordinary course of business. These matters are frequently covered by insurance. If it has been determined that a loss is probable to occur and the amount of the loss can be reasonably estimated, the estimated amount of the loss is accrued in the Partnership's consolidated financial statements. If the Partnership determines that a loss is reasonably possible, the Partnership will, if material, disclose the nature of the loss contingency and the estimated range of possible loss, or include a statement that no estimate of loss can be made. While the resolution of these matters cannot be predicted with certainty, the Partnership currently believes there are no pending legal proceedings in which the Partnership is currently involved the outcome of which will have a material effect on the Partnership’s financial condition, results of operations, or cash flows.

Bond Purchase Commitments

The Partnership may enter into bond purchase commitments related to MRBs to be issued and secured by properties under construction. Upon execution of the bond purchase commitment, the proceeds from the MRBs will be used to pay off the construction related debt. The Partnership bears no construction or stabilization risk during the commitment period. The Partnership accounts for its bond purchase commitments as available-for-sale securities and reports the asset or liability at fair value. Changes in the fair value of bond purchase commitments are recorded as gains or losses on the Partnership's consolidated statements of comprehensive income (loss). The following table summarizes the Partnership’s bond purchase commitments as of December 31, 2022:


Bond Purchase Commitments	Commitment Date	Maximum Committed Amounts Remaining		Interest Rate			Estimated Closing Date	Fair Value as of December 31, 2022		Fair Value as of December 31, 2021
CCBA Senior Garden Apartments	July 2020	$	-		4.50	%	June 2022 (1)	$	-	$	495,784
Anaheim & Walnut	September 2021		3,900,000		4.85	%	Q3 2024		98,929		468,620
		$	3,900,000					$	98,929	$	964,404

(1)

The closing date is actual.

Investment Commitments

The Partnership has remaining commitments to provide additional funding of certain MRBs, taxable MRBs, GILs, taxable GILs, and property loans while the secured properties are under construction or rehabilitation. The Partnership has outstanding commitments to contribute additional equity to unconsolidated entities. The following table summarizes the Partnership's total and remaining commitments as of December 31, 2022:


Property Name	Commitment Date	Maturity Date	Interest Rate (1)	Total Initial Commitment		Remaining Commitment as of December 31, 2022
Mortgage Revenue Bonds
Residency at the Mayer - Series A	October 2021	April 2039	SOFR + 3.60%	$	29,500,000	$	3,500,000
Meadow Valley	December 2021	December 2029	6.25%		44,000,000		39,276,563
Residency at the Entrepreneur- Series J-3	April 2022	March 2040	6.00%		26,080,000		22,180,000
Residency at the Entrepreneur- Series J-4	April 2022	March 2040	SOFR + 3.60% (2)		16,420,000		16,420,000
Residency at Empire - Series BB-3	December 2022	December 2040	6.45% (4)		14,000,000		13,945,000
Residency at Empire - Series BB-4	December 2022	December 2040	6.45% (5)		47,000,000		47,000,000
Subtotal					177,000,000		142,321,563

Taxable Mortgage Revenue Bonds
Residency at the Mayer Series A-T	October 2021	April 2024 (3)	SOFR + 3.70%	$	12,500,000	$	11,500,000
Residency at the Entrepreneur Series J-T	April 2022	April 2025 (3)	SOFR + 3.65%		13,000,000		12,000,000
Residency at Empire - Series BB-T	December 2022	December 2025 (3)	7.45%		9,404,500		8,404,500
Subtotal					34,904,500		31,904,500

Governmental Issuer Loans
Osprey Village	July 2021	August 2024 (3)	SOFR + 3.07%		60,000,000		20,106,960
Willow Place Apartments	September 2021	October 2024 (3)	SOFR + 3.30%		25,000,000		7,645,528
Poppy Grove I	September 2022	April 2025 (3)	6.78%		35,688,328		27,842,328
Poppy Grove II	September 2022	April 2025 (3)	6.78%		22,250,000		17,708,700
Poppy Grove III	September 2022	April 2025 (3)	6.78%		39,119,507		30,569,507
Subtotal					182,057,835		103,873,023

Taxable Governmental Issuer Loans
Hope on Avalon	January 2021	August 2023	SOFR + 3.55%	$	10,573,000	$	5,573,000
Poppy Grove I	September 2022	April 2025 (3)	6.78%		21,157,672		20,157,672
Poppy Grove II	September 2022	April 2025 (3)	6.78%		10,941,300		9,941,300
Poppy Grove III	September 2022	April 2025 (3)	6.78%		24,480,493		23,480,493
Subtotal					67,152,465		59,152,465

Property Loans
Oasis at Twin Lakes	July 2020	August 2023 (3)	LIBOR + 2.50%	$	27,704,180	$	3,685,523
Hilltop at Signal Hills	January 2021	August 2023 (3)	SOFR + 3.07%		21,197,939		1,479,605
Legacy Commons at Signal Hills	January 2021	February 2024 (3)	SOFR + 3.07%		32,233,972		2,567,067
Osprey Village	July 2021	August 2024 (3)	SOFR + 3.07%		25,500,000		24,500,000
Willow Place Apartments	September 2021	October 2024 (3)	SOFR + 3.30%		21,351,328		20,351,328
Magnolia Heights	June 2022	July 2024 (3)	SOFR + 3.85%		10,300,000		4,111,399
Subtotal					138,287,419		56,694,922

Equity Investments
Vantage at San Marcos (6), (7)	November 2020	N/A	N/A	$	9,914,529	$	8,943,914
Freestone Greeley (7)	October 2022	N/A	N/A		16,035,710		11,325,008
Freestone Cresta Bella (7)	November 2022	N/A	N/A		16,405,514		10,204,191
Subtotal					42,355,753		30,473,113

Bond Purchase Commitments
Anaheim & Walnut	September 2021	Q3 2024 (8)	4.85%	$	3,900,000	$	3,900,000
Subtotal					3,900,000		3,900,000

Total Commitments				$	645,657,972	$	428,319,586

(1)

The variable index interest rate components are typically subject to floors that range from 0% to 0.85%.

(2)

Upon stabilization, the MRB will convert to a fixed rate of 8.0% and become subordinate to the other senior MRBs.

(3)

The borrowers may elect to extend the maturity date for a period ranging between six and twelve months upon meeting certain conditions, which may include payment of a non-refundable extension fee.

(4)

Beginning December 2029, the interest rate will change to the greater of (i) 3.25% over the then 10-Year SOFR Swap rate, or (ii) 6.00%.

(5)

Upon stabilization, the MRB will convert to a fixed rate of 10.0% and become subordinate to the other senior MRBs of the borrower.

(6)

The property became a consolidated VIE effective during the fourth quarter of 2021 (Note 5).

(7)

A development site has been identified for this property but construction had not commenced as of December 31, 2022.

(8)

This is the estimated closing date of the associated bond purchase commitment.

Construction Loan Guaranties

The Partnership entered into guaranty agreements for bridge loans related to certain investments in unconsolidated entities. The Partnership will only have to perform on the guaranties if a default by the borrower were to occur. The Partnership has not accrued any amount for these contingent liabilities because the Partnership believes the likelihood of guaranty claims is remote. The following table summarizes the Partnership’s maximum exposure under these guaranty agreements as of December 31, 2022:


Borrower	Guaranty Maturity	Maximum Balance Available on Loan		Loan Balance as of December 31, 2022		Partnership's Maximum Exposure as of December 31, 2022		Guaranty Terms
Vantage at Stone Creek	2023	$	34,222,000	$	34,222,000	$	17,111,000	(1)
Vantage at Coventry	2023		34,536,000		34,536,000		17,268,000	(1)

(1)

The Partnership’s guaranty is for 50% of the loan balance. The Partnership has guaranteed up to 100% of the outstanding loan balance upon the occurrence of fraud or other willful misconduct by the borrower or if the borrower voluntarily files for bankruptcy. The guaranty agreement requires the Partnership to maintain a minimum net worth of not less than $100.0 million and maintain liquid assets of not less than $5.0 million. The Partnership was in compliance with these requirements as of December 31, 2022. The Partnership has also provided indemnification to the lender for various costs including environmental non-compliance and remediation during the term.

Other Guaranties and Commitments

The Partnership has entered into guaranty agreements with unaffiliated entities under which the Partnership has guaranteed certain obligations of the general partners of certain limited partnerships upon the occurrence of a “repurchase event.” Potential repurchase events include LIHTC tax credit recapture and foreclosure. The Partnership’s maximum exposure is limited to 75% of the equity contributed by the limited partner to each limited partnership. No amount has been accrued for these guaranties because the likelihood of repurchase events is remote. The following table summarizes the Partnership’s maximum exposure under these guaranty agreements as of December 31, 2022:


Limited Partnership(s)	End of Guaranty Period	Partnership's Maximum Exposure as of December 31, 2022
Ohio Properties	2026	$	2,310,609
Greens of Pine Glen, LP	2027		1,662,397

In December 2022, the Partnership sold 100% of its ownership interest in The 50/50 MF Property to an unrelated non-profit organization. The buyer assumed two mortgages payable associated with the property and the Partnership agreed to provide certain recourse support for the assumed mortgages. The TIF Loan support is in the form of a payment guaranty. The Mortgage support is in the form of a forward loan purchase agreement upon maturity of the Mortgage. The estimated fair value of the credit guaranties as of the commitment date totaled approximately $363,000 and is included within other liabilities in the Partnership's consolidated financial statements. No additional contingent liability has been accrued because the likelihood of claims is remote. The following table summarizes the Partnership’s maximum exposure under these credit guaranties as of December 31, 2022:


Borrower	End of Guaranty Period	Partnership's Maximum Exposure as of December 31, 2022
The 50/50 MF Property--TIF Loan	2025	$	1,809,510
The 50/50 MF Property--Mortgage	2027		22,419,849